Home Bankers Savings and Trust Company v. Court of Appeals
REITERATIONFacts
1. The Antecedents: Victor Tancuan issued a P25,250,000.00 check from Home Bankers Savings and Trust Company (HBSTC), while Eugene Arriesgado issued three checks totaling P25,200,000.00 from Far East Bank & Trust Co. (FEBTC). After exchanging these checks and depositing them, HBSTC dishonored Tancuan's check for insufficient funds. Subsequently, FEBTC returned Arriesgado's checks to HBSTC due to insufficient funds, but HBSTC refused to accept them, claiming they were returned beyond the reglementary period, implying they had already considered the checks cleared and allowed withdrawals. FEBTC demanded reimbursement, which HBSTC refused. 2. Procedural History: The dispute was submitted to arbitration before the Philippine Clearing House Corporation (PCHC) Arbitration Committee. While arbitration was pending, FEBTC filed a separate civil action for sum of money and damages with preliminary attachment against HBSTC and others in the Regional Trial Court (RTC) of Makati. HBSTC moved to dismiss, arguing the court lacked jurisdiction as the matter was under arbitration. The RTC denied this motion. HBSTC then filed a petition for certiorari with the Court of Appeals (CA), challenging the RTC's denial of its motion to dismiss. The CA dismissed HBSTC's petition, holding that FEBTC could pursue its cause of action in court, especially to seek conservatory relief like a writ of preliminary attachment, even while arbitration was ongoing. 3. The Petition: This case is before the Supreme Court on a petition for review under Rule 45 of the Rules of Court. HBSTC argues that a civil suit cannot be filed while arbitration is pending, that the civil suit is barred by litis pendentia, and that the CA erred in not dismissing the case and in allowing the writ of preliminary attachment. HBSTC contends that the CA's ruling conflicts with prior Supreme Court decisions like Puromines, Inc. v. Court of Appeals. The core issue presented is whether a party that has commenced arbitration can file a separate court case over the same subject matter to obtain a provisional remedy like attachment, despite the pending arbitration.
Issue(s)
Whether the Court of Appeals committed grave abuse of discretion in denying petitioner's motion to dismiss the civil case filed by respondent FEBTC. Whether a party to an arbitration proceeding may file a separate court action for conservatory reliefs, such as a writ of preliminary attachment, over the same subject matter of the arbitration; and the application of cited jurisprudence.
Ruling
The petition is dismissed, and the decision of the Court of Appeals is affirmed.
Ratio Decidendi
On the issue of filing a separate court action during arbitration: The Supreme Court affirmed the Court of Appeals' ruling that FEBTC could file a separate civil action for sum of money and damages with preliminary attachment despite the pendency of arbitration proceedings. The Court clarified that Section 14 of Republic Act No. 876 (Arbitration Law) explicitly allows any party to an arbitration proceeding to petition the court to take measures to safeguard or conserve any matter which is the subject of the dispute in arbitration. The civil action filed by FEBTC, which included a prayer for a writ of preliminary attachment, was deemed a measure to safeguard the subject matter of the dispute, which was the sum of P25,200,000.00 allegedly deprived from FEBTC due to a "kiting scheme." Therefore, the filing of the civil action was sanctioned by law and did not constitute a violation of the arbitration agreement or the principle of litis pendentia in this context. On the application of cited jurisprudence and the availability of conservatory reliefs during arbitration: The Supreme Court distinguished the present case from Associated Bank v. Court of Appeals and Puromines, Inc. v. Court of Appeals. In Associated Bank, the parties were bound by PCHC Rules and Regulations, and a party could not bypass the arbitration process to seek relief directly from the courts. However, in the present case, FEBTC had initiated arbitration proceedings as required by PCHC rules and then sought conservatory relief from the trial court, which is sanctioned by Section 14 of the Arbitration Law. Regarding Puromines, the Court noted that it might have been decided on a different factual basis, and the core issue in the present case was the availability of conservatory reliefs during arbitration, which Section 14 of RA 876 specifically addresses. The Court reiterated that while arbitration is encouraged, conservatory measures to safeguard the subject matter of the dispute are permissible through court action.
Main Doctrine
A party to an arbitration proceeding may file a separate court action for conservatory reliefs, such as a writ of preliminary attachment, to safeguard the subject matter of the dispute, as sanctioned by Section 14 of Republic Act No. 876, without violating the principle of litis pendentia or the arbitration agreement.