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2 - Home Bankers Savings and Trust Co. V CA - Armada

The document discusses a case between Home Bankers Savings and Trust Co. and Far East Bank and Trust Company regarding checks that were dishonored and returned due to insufficient funds. The Court of Appeals and Supreme Court both found that while an arbitration was pending, Far East Bank was allowed to file a separate case in court seeking a writ of preliminary attachment over the same subject matter under Section 14 of the Arbitration Law.

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ANGEL JOY RABAGO
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52 views2 pages

2 - Home Bankers Savings and Trust Co. V CA - Armada

The document discusses a case between Home Bankers Savings and Trust Co. and Far East Bank and Trust Company regarding checks that were dishonored and returned due to insufficient funds. The Court of Appeals and Supreme Court both found that while an arbitration was pending, Far East Bank was allowed to file a separate case in court seeking a writ of preliminary attachment over the same subject matter under Section 14 of the Arbitration Law.

Uploaded by

ANGEL JOY RABAGO
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Name: ARMADA, Restine Joy M.

Home Bankers Savings and Trust Co. v CA

G.R. No. 115412 November 19, 1999 Buena, J.

Facts: Victor Tancuan issued Home Bankers Savings and Trust Company (HBSTC) check amounting to
P25,250,000.00 while Eugene Arriesgado issued 3 Far East Bank and Trust Company (FEBTC) check
with an accruing amount of 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. 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. FEBTC submitted the dispute for arbitration before the
PCHC Arbitration Committee, 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. while the arbitration proceeding was still pending, FEBTC filed an action for sum of money and
damages with preliminary attachment against HBSTC before RTC Makati. 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." Trial court denied
the motion to dismiss filed by HSBTC. MR also denied. 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.

CA: CA dismissed the petition for lack of merit and held that" [i]n the Complaint, FEBTC applied for
the issuance of a writ of preliminary attachment over HBT’s [HBSTC] property" 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."

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 v. Stolt-Nielsen Philippines, Inc., 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." Further, it held that 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."

Issue/s: W/N FEBTC which commenced an arbitration proceeding may subsequently file a separate
case for seeking provisional remedy of attachment in court over the same subject matter of arbitration
despite the pendency of the arbitration
Held: No. The court 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.
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. 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. Petition is dismissed.

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