ALLIED BANKING CORPORATION

vs
. CA and POTENCIANO L.GALANIDAG.R. No. 144412November 18, 2003
Carpio, J.
Facts:Private respondent is an employee of petitioner, hired as anaccountant-bookkeeper and eventually promoted as an
assistantmanager which included his transfer to several branches ninetimes. His appointment was covered by a Notice of
PersonnelAction which provides as one of the conditions of employment theprovision on petitioners right to transfer employees on
as a regularappointment as the need arises in the interest of maintaining smoothand uninterrupted service to the public.Effecting a
rotation/movement of officers assigned inthe Cebu homebase, petitioner listed respondent as second in theorder of priority of
assistant managers to be assigned outside of Cebu City. However, private respondent refused to be transferredto Bacolod City in a
letter by reason of parental obligations, expenses,and the anguish that would result if he is away from his family. Hethereafter filed a
complaint before the Labor Arbiter for constructivedismissal.Subsequently, petitioner informed private respondent that hewas to
report to the Tagbilaran City Branch, however, privaterespondent again refused. As a result, petitioner warned and requiredhim to
follow the said orders; otherwise, he shall be penalized underthe companys discipline policy. Furthermore, private respondent
wasrequired to explain and defend himself. The latter replied stating thatwhether he be suspended or dismissed, it would all the
moreestablish and fortify his complaint pending before the NLRC andfurther charges petitioner with discrimination and favoritism
inordering his transfer. He further alleges that the managementsdiscriminatory act of transferring only the long staying accountants
of Cebu in the guise of its exercise of management prerogative when intruth and in fact, the ulterior motive is to accommodate some
newofficers who happen to enjoy favorable connection with management.As a result, petitioner, through a Memo, informed
privaterespondent that Allied Bank is terminating him. The reasons given forthe dismissal were: (1) continued refusal to be
transferred from the Jakosalem, Cebu City branch; and (2) his refusal to report for workdespite the denial of his application for
additional vacation leave. The Labor Arbiter held that petitioner had abused itsmanagement prerogative in ordering private
respondents transferand the refusal by the latter did not amount to insubordination. TheNLRC likewise ruled that: (1) petitioner
terminated the privaterespondent without just cause considering family considerations; (2)the transfer is a demotion since the
Bacolod and Tagbilaran brancheswere smaller than the Jakosalem branch, a regional office, andbecause the bank wanted him, an
assistant manager, to replace anassistant accountant in the Tagbilaran branch; (3) the terminationwas illegal for lack of due process
as no hearing appears to have beenconducted and that petitioner failed to send a termination notice andinstead issued a Memo
merely stating a notice of termination wouldbe issued, but petitioner did not issue any notice; and (4) petitionerdismissed private
respondent in bad faith, tantamount to an unfairlabor practice as the dismissal undermined the latters right tosecurity of tenure and
equal protection of the laws. The ruling of NLRC was later affirmed by the Court of Appeals.Issues:1.WHETHER THERE IS LEGAL
BASIS IN PETITIONERSEXERCISE OF ITS MANAGEMENT PREROGATIVE.
2.WHETHER PRIVATE RESPONDENTS REFUSAL TO TRANSFER CONSTITUTES VIOLATIONS OF COMPANY RULESWARRANTING
THE PENALTY OF DISMISSAL.3.WHETHER PETITIONER DISCRIMINATED AGAINST PRIVATERESPONDENT IN DIRECTING HIS
TRANSFER.
4.WHETHER PRIVATE RESPONDENTS TRANSFERCONSTITUTES A DEMOTION.5.WHETHER PETITIONER IS COMMITTED
ULP.6.WHETHER ALLIED BANK AFFORDED PRIVATE RESPONDENTDUE PROCESS.Held:
1. Yes. The rule is that the transfer of an employee ordinarilylies within the ambit of the employers prerogatives. Theemployer
exercises the prerogative to transfer an employee forvalid reasons and according to the requirement of its business,provided the
transfer does not result in demotion in rank ordiminution of the employees salary, benefits and other privileges. In illegal dismissal
cases, the employer has the burdenof showing that the transfer is not unnecessary, inconvenient andprejudicial to the displaced
employee.
2. Yes. Private respondent was well aware of petitionerspolicy of periodically transferring personnel to differentbranches. The
assignment to the different branches of AlliedBank was a condition of his employment and he consented to thiscondition when he
signed the Notice of Personnel Action. The Court cannot accept the proposition that when anemployee opposes his employers
decision to transfer him toanother work place, there being no bad faith or underhandedmotives on the part of either party, it is the
employees wishesthat should be made to prevail. The refusal to obey a valid transfer order constituteswillful disobedience of a
lawful order of an employer. Employeesmay object to, negotiate and seek redress against employers forrules or orders that they
regard as unjust or illegal. However,until and unless these rules or orders are declared illegal orimproper by competent authority, the
employees ignore ordisobey them at their peril. Therefore, privaterespondents continued refusal to obey Allied Banks
transferorders warrants just cause in his dismissal in accordance withArticle 282 (a) of the Labor Code and thus not entitled
toreinstatement or to separation pay.
3.No. Allied Banks letter of 13 June 1994 showed that atleast 14 accounting officers and personnel from variousbranches, including
private respondent, were transferred to otherbranches. Allied Bank did not single him out. The same letterexplained that he was
second in line for assignmentoutside Cebu because he had been in Cebu for seven yearsalready. It must be noted that none of the
other transferees joined private respondents in his complaint or corroborated hisallegations of widespread discrimination and
favoritism.
4.No. No evidence was presented showing that the transferwould diminish his salary, benefits, or privileges. On the
contrary,petitioners letter of 13 June 1994 assured private respondentthat he would not suffer any reduction in rank or grade, and
thatthe transfer would involve the same rank, duties and obligations.
5.No. Unfair labor practices relate only to violations of theconstitutional right of workers and employees to self-organization and
are limited to the acts enumerated in Article248 of the Labor Code, none of which applies to the presentcase. There is no evidence
that private respondent took part informing a union, or even that a union existed in Allied Bank.
6. Yes. To be effective, a dismissal must comply with Section2 (d), Rule 1, Book VI of the Omnibus Rules Implementing theLabor Code
which provides:For termination of employment based on just causesas defined in Article 282 of the Labor Code:(i)A written notice
served on the employee specifyingthe ground or grounds of termination, and givingsaid employee reasonable opportunity within
whichto explain his side.(ii)A hearing or conference during which theemployee concerned, with the assistance of counsel if he so
desires is given opportunity torespond to the charge, present his evidence, orrebut the evidence presented against him.
(iii)
A written notice of termination served onthe employee indicating that upon dueconsideration of all the circumstances, groundshave
been established to justify his termination. The first written notice was embodied in Allied Banks letterof 13 June 1994. The first
notice required private respondent toexplain why no disciplinary action should be taken against him for hisrefusal to comply with
the transfer orders. On the requirement of ahearing, the Court has held that the essence of due process is simplyan opportunity to be
heard. An actual hearing is not necessary. Theexchange of several letters gave him an opportunity to respond to thecharges against
him. The Memo, although captioned Transfer and Reassignment,did not preclude it from being a notice of termination. The Court
hasheld that the nature of an instrument is characterized not by the titlegiven to it but by its body and contents. Moreover, private
respondenthimself regarded the Memo as a notice of termination. The Memoshows that it unequivocally informed private
respondent of AlliedBanks decision to dismiss him and discussed the findings of theInvestigation Committee that served as grounds
for the dismissal. Inaddition, the Memo also refuted the charges of discrimination anddemotion.However, the Memo suffered from
certain errors. Althoughthe Memo stated that termination was to be effective as of 1
September 1994, the Memo bore the date 8 September 1994. Moreimportantly, private respondent only received a copy of the
Memoon 5 October 1994, or more than a month after the supposed date of his dismissal. To be effective, a written notice of
termination mustbe served on the employee. Allied Bank could not terminate him on 1September 1994 because he had not received
as of that date thenotice of Allied Banks decision to dismiss him. The dismissal couldonly take effect on 5 October 1994, upon his
receipt of the Memo. Forthis reason, private respondent is entitled to backwages for theperiod from 1 September 1994 to 4 October
1994.Fallo:CA and NLRC affirmed. Case is remanded to the Labor Arbiter forthe computationof the backwages, inclusive of
allowances and otherbenefits, due to private respondent from 1 September 1994 until 4October 1994.Labor Arbiter Dominador A.
Almirante and Atty. Loreto M. Duranoare ADMONISHED to be more careful in citing the decisions of theSupreme Court in the future (
Dosch v. NLRC
129 Allied Bank vs. CA
|G.R. No. 85868. October 13, 1989 |
FACTS
Private respondent Joselito Z. Yujuico obtained a loan from the General Bank and Trust Company (GENBANK) in the amount of Five
Hundred Thousand pesos(P500,000.00), payable on or before April 1, 1977. As evidence thereof, privaterespondent issued a
corresponding promissory note in favor of GENBANK. At thetime private respondent incurred the obligation, he was then a ranking
officer of GENBANK and a member of the family owning the controlling interest in the saidbank.
On March 25,1977, the Monetary Board of the Central Bank issued Resolution No.675 forbidding GENBANK from doing business in
the Philippines. This wasfollowed by Resolution No. 677 issued by the Monetary Board on March 29, 1977ordering the liquidation of
GENBANK.
It appears that in a Memorandum of Agreement dated May 9, 1977 executed by andbetween Allied Banking Corporation (ALLIED)
and Arnulfo Aurellano asLiquidator of GENBANK, ALLIED acquired all the assets and assumed theliabilities of GENBANK, which
includes the receivable due from privaterespondent under the promissory note.
Upon failing to comply with the obligation under the promissory note, petitioner ALLIED, on February 7, 1979, filed a complaint
against private respondent for thecollection of a sum of money. This case was docketed as Civil Case No. 121474before the then Court
of First Instance of Manila (now Regional Trial Court).
Sometime in 1987 and in the course of the proceedings in the court below, privaterespondent, then defendant in the court below,
filed a Motion to Admit Amended/Supplemental Answer and Third-Party Complaint. Private respondentsought to implead the
Central Bank and Arnulfo Aurellano as third-party defendants. It was alleged in the third-party complaint that by reason of the
tortiousinterference by the Central Bank with the affairs of GENBANK, private respondent was prevented from performing his
obligation under the loan such that he shouldnot now be held liable thereon.ISSUES & ARGUMENTS
W/N Arnulfo Arellano and Central Bank are liable for tortious interferenceHOLDING & RATIO DECIDENDI They are liable for
tortious interference but the action has already prescribe. As early as Capayas vs. Court of First Instance of Albay,
11
this Court had already outlined the tests to determine whether the claim for indemnity in a third-party claim is"in respect of
plaintiff's claim." They are: (a) whether it arises out of the same transactionon which the plaintiffs claim is based, or whether the
third-party's claim, although arising out of another or different contract or transaction, is connected with the plaintiffs claim;(b)
whether the third-party defendant would be liable to the plaintiff or to the defendantfor all or part of the plaintiffs claim against the
original defendant, although the third-party defendant's liability arises out of another transaction; or (c) whether the third-party
defendant may assert any defense which the third-party plaintiff has, or may have againstplaintiff s claim.
1 While the claim of third-party plaintiff, private respondent herein, does not fall undertest (c), there is no doubt that such claim can
be accommodated under tests (a) and (b)above-mentioned. Whether or not this Court agrees with the petitioner's assertion thatthe
claim does not "arise out of the same transaction on which the plaintiff s claim isbased," it cannot be denied that the third-party's
claim (although arising out of anotheror different contract or transaction) is connected with plaintiffs claim. Put differently,there is
merit in private respondent's position that if held liable on the promissory note,they are seeking, by means of the third-party
complaint, to transfer unto the third-party defendants liability on the note by reason of the illegal liquidation of GENBANK which,in
the first place, was the basis for the assignment of the promissory note. If there wasany confusion at all on the ground/s alleged in the
third-party complaint, it was the claimof third-party plaintiff for other damages in addition to any amount which he may becalled
upon to pay under the original complaint.
While these allegations in the proposedthird-party complaint may cause delay in the disposition of the main suit, it cannot,however,
be outrightly asserted that it would not serve any purpose. As to the issue of prescription, it is the position of petitioner that the cause
of actionalleged in the third-party complaint has already prescribed. Being founded on what wastermed as tortious interference,"
petitioner asserts that under the applicable provisions of the Civil Code on quasi-delict the action against third-party defendants
should have beenfiled within four (4) years from the date the cause of action accrued
VP PADILLA
3D 2009-2010 DIGESTS TORTS & DAMAGES
Page 143 of 528
130 Arsenio Delos Reyes et al. v. CA
FACTS
28 July 1987 RTC dismissed recovery of possession of real property with damagesfiled by petitioners against private respondents.
23 January 1995 CA affirmed orderof dismissal.
7 July 1942 vendors Delos Reyes sold 10,000sqm to Mercado and Pena out of 13405sqm. 4 June 1943 vendees managed to get a TCT
covering whole parcel worth13405sqm. Pena sold whole property to de Guzman and de Onon, and they in turnsold the land until
private respondents managed to acquire the current property.
3 October 1978 petitioners filed an action for reconveyance over the unsold3405sqm portion
ISSUES & ARGUMENTS
W/N An action for reconveyance can prosper if filed more than 30 yearsagainst holder for value?
HOLDING & RATIO DECIDENDI
PETITION DENIED.
Right is not imprescriptible. There is a time corridor for filing. Art 1141 of CivilCode provides real actions over 143mmovables
prescribe after 30 years. Actioninitiated only after 36 years. Right has prescribed.
Even if allowed by law petition still barred by laches as 36 years have passed andneither the original vendor nor the heirs attempted
to restrain the transfer of the3405sqm
HOME BANKERS SAVINGS AND TRUST COMPANY, petitioner,
vs.
COURT OF APPEALS and FAR EAST BANK & TRUST CO., INC. respondents.
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, issued 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 proceeding 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. Stolt-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 pendentia
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 as and Ledesma vs. Court of Appeals. 29 Petitioner demurs that
the Puromines ruling was deliberately not followed by the respondent court which claimed that:
It would really be much easier for Us to rule to dismiss the complaint as the petitioner 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.
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 respondent 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 PROCEEDING. 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:

Sec. 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:

. . . . . .. 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.
ALLIED BANKING CORPORATION, petitioner, vs. COURT OF APPEALS and BANK OF THE PHILIPPINE ISLANDS, INC., respondents.
D E C I S I O N
PANGANIBAN, J.:

As a general rule, a trial court that has established jurisdiction over the main action also acquires jurisdiction over a third-party
complaint, even if it could not have done so had the latter been filed as an independent action. This rule, however, does not apply to
banks that have agreed to submit their disputes over check clearings to arbitration under the rules of the Philippine Clearing House
Corporation. In that event, primary recourse should be to the PCHC Arbitration Committee, without prejudice to an appeal to the
trial courts. In other words, without first resorting to the PCHC, the third-party complaint would be premature.

The Case

Before us is a petition for review on certiorari under Rule 45, assailing the Decision dated February 12, 1996 promulgated by the
Court of Appeals[1] in CA-GR CV No. 44804; which affirmed the trial courts Order dated September 16, 1991, dismissing petitioners
third-party complaint against private respondent.[2]

Facts of the Case

The facts are undisputed. Reproduced hereunder is Respondent Courts narration:

Hyatt Terraces Baguio issued two crossed checks drawn against Allied Banking Corp. (hereinafter, ALLIED) in favor of appellee
Meszellen Commodities Services, Inc. (hereinafter, MESZELLEN). Said checks were deposited on August 5, 1980 and August 18,
1980, respectively, with the now defunct Commercial Bank and Trust Company (hereinafter, COMTRUST). Upon receipt of the above
checks, COMTRUST stamped at the back thereof the warranty All prior endorsements and/or lack of endorsements guaranteed.
After the checks were cleared through the Philippine Clearing House Corporation (hereinafter, PCHC), ALLIED BANK paid the
proceeds of said checks to COMTRUST as the collecting bank.

On March 17, 1981, the payee, MESZELLEN, sued the drawee, ALLIED BANK, for damages which it allegedly suffered when the
value[s] of the checks were paid not to it but to some other person.

Almost ten years later, or on January 10, 1991, before defendant ALLIED BANK could finish presenting its evidence, it filed a third
party complaint against Bank of the Philippine Islands (hereinafter, BPI, appellee herein) as successor-in-interest of COMTRUST, for
reimbursement in the event that it would be adjudged liable in the main case to pay plaintiff, MESZELLEN. The third party complaint
was admitted [in] an Order dated May 16, 1991 issued by the Regional Trial Court of Pasig, Branch 162. On July 16, 1991, BPI filed a
motion to dismiss said third party complaint grounded on the following: 1) that the court ha[d] no jurisdiction over the nature of the
action; and 2) that the cause of action of the third party plaintiff ha[d] already prescribed.

On September 16, 1991, the trial court issued an order dismissing the third party complaint. Defendant-third party plaintiffs
motion for reconsideration of this order was subsequently denied.[3]

Respondent Courts Ruling

Respondent Court affirmed the trial court thus:

x x x Appellants submission that the cause of action of the third party plaintiff against the third party defendant accrued only when
the complaint in the original case was filed on March 17, 1981 is untenable. As earlier discussed, the defendant has a separate cause
of action (in respect of plaintiffs complaint) against a third party in the original and principal case. Reviewing the third-party
complaint below, that cause of action is the supposed erroneous endorsement made by COMTRUST for which ALLIED BANK is being
held liable for damages by the payee-appellee. Without COMTRUSTs warranties as a general endorser, ALLIED BANK allegedly
would not have paid on the checks. Should such warranties prove to be false and inaccurate, COMTRUST may be held liable for any
damage arising out of the falsity of its representation.

Based on the records the subject endorsement of COMTRUST was made in August 1980[;] and in the same period, ALLIED BANK
paid on the subject checks. From that moment, ALLIED BANK could have instituted an action against COMTRUST. It is the legal
possibility of bringing the action which determines the starting point for the computation of the period (Tolentino, Civil Code of the
Philippines, Vol. IV, p. 41, citing Manresa). This is the moment when a cause of action may be deemed to accrue. Thus, considering
that the third party complaint was filed more than ten years from August 1980, specifically on January 10, 1991, the same can no
longer be entertained.

Even granting arguendo that the lower court had jurisdiction over the third party complaint and the cause of action thereof had not
yet prescribed, the filing of the third party complaint should nevertheless be disallowed considering that defendant has already
presented several witnesses and is about ready to rest its case because, then, the allowance of the third party complaint would only
delay the resolution of the original case. (Firestone Tire and Rubber Co. of the Phil. vs. Tempengko, supra, p. 423).

A final word. We have noted the curious situation here where, instead of the payee suing its bank, i.e., the collecting bank (which is
COMTRUST), it opted to sue the drawee bank (ALLIED BANK). It is, however, up to the trial court to rule on the propriety of the latter
complaint.[4]

Not satisfied with the above ruling, petitioner filed the present petition before this Court.[5]

The Issues

Petitioner raises the following issues:[6]

I. The Respondent Honorable Court of Appeals erred in holding that the cause of action of the third-party complaint ha[d] already
prescribed.

II. The Respondent Honorable 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.

On the other hand, private respondent argues that the trial court had no authority to admit a third-party claim that was filed by one
bank against another and involved a check cleared through the Philippine Clearing House Corporation (PCHC). To the mind of the
Court, this is the critical issue.

The Courts Ruling

The petition is bereft of merit.

Critical Issue: Mandatory Recourse to PCHC

To buttress its claim, private respondent contends that petitioners remedy rests with the PCHC, of which both Allied and BPI are
members, in consonance with the Clearing House Rules and Regulations which, in part, states:

Sec. 38 - Arbitration

Any dispute or controversy between two or more clearing participants involving any check/item cleared thru PCHC shall be
submitted to the Arbitration Committee, upon written complaint of any involved participant by filing the same with the PCHC serving
the same upon the other party or parties, who shall within fifteen (15) days after receipt thereof file with the Arbitration Committee
its written answer to such written complaint and also within the same period serve the same upon the complaining participant, xxx.

Private respondent cites Banco de Oro Savings and Mortgage Bank v. Equitable Banking Corporation[7] and Associated Bank v. Court
of Appeals,[8] which upheld the right of the PCHC to settle and adjudicate disputes between member banks. In Banco de Oro, the
Court ruled:

The participation of the two banks, petitioner and private respondent, in the clearing operations of PCHC is a manifestation of their
submission to its jurisdiction. Secs. 3 and 36.6 of the PCHC-CHRR clearing rules and regulations provide:

Sec. 3. AGREEMENT TO THESE RULES. - It is the general agreement and understanding that any participant in the Philippine Clearing
House Corporation, MICR clearing operations[,] by the mere fact of their participation, thereby manifests its agreement to these Rules
and Regulations and its subsequent amendments.

Sec. 36.6. (ARBITRATION) - The fact that a bank participates in the clearing operations of the PCHC shall be deemed its written and
subscribed consent to the binding effect of this arbitration agreement as if it had done so in accordance with section 4 of (the)
Republic Act. No. 876, otherwise known as the Arbitration Law.

Further[,] Section 2 of the Arbitration Law mandates:

Two or more persons or parties may submit to the arbitration of one or more arbitrators any controversy existing between them at
the time of the submission and which may be the subject of any action, or the parties of any contract may in such contract agree to
settle by arbitration a controversy thereafter arising between them. Such submission or contract shall be valid and irrevocable, save
upon grounds as exist at law for the revocation of any contract.

Such submission or contract may include question arising out of valuations, appraisals or other controversies which may be
collateral, incidental, precedent or subsequent to any issue between the parties. (Italics supplied.)

Associated Bank also disallowed a similar third-party complaint, ruling thus:

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. Since claims
relating to the regularity of checks cleared by banking institutions are among those claims which should first be submitted for
resolution by the PCHCs Arbitration Committee, petitioner Associated Bank, having voluntarily bound itself to abide by such rules
and regulations, is estopped from seeking relief from the Regional Trial Court on the coattails of a private claim and in the guise of a
third party complaint without first having obtained a decision adverse to its claim from the said body. It cannot bypass the
arbitration process on the basis of its averment that its third party complaint is inextricably linked to the original complaint in the
Regional Trial Court.

x x x x x x x x x

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 [from] the PCHC before going to the trial court.

Finally, the contention that the third party complaint should not have been dismissed for being a necessary and inseparable offshoot
of the main case over which the court a quo had already exercised jurisdiction misses the fundamental point about such pleading. A
third party complaint is a mere procedural device which under the Rules of Court is allowed only with the courts permission. It is an
action actually independent of, separate and distinct from the plaintiffs complaint (s)uch that, were it not for the Rules of Court, it
would be necessary to file the action separately from the original complaint by the defendant against the third party. (Italics
supplied.)

Banco de Oro and Associated Bank are clear and unequivocal: a third-party complaint of one bank against another involving a check
cleared through the PCHC is unavailing, unless the third-party claimant has first exhausted the arbitral authority of the PCHC
Arbitration Committee and obtained a decision from said body adverse to its claim.

Recognizing the role of the PCHC in the arbitration of disputes between participating banks, the Court in Associated Bank further
held: Pursuant to its function involving the clearing of checks and other clearing items, the PCHC has adopted rules and regulations
designed to provide member banks with a procedure whereby disputes involving the clearance of checks and other negotiable
instruments undergo a process of arbitration prior to submission to the courts below. This procedure not only ensures a uniformity
of rulings relating to factual disputes involving checks and other negotiable instruments but also provides a mechanism for settling
minor disputes among participating and member banks which would otherwise go directly to the trial courts.

We defer to the primary authority of PCHC over the present dispute, because its technical expertise in this field enables it to better
resolve questions of this nature. This is not prejudicial to the interest of any party, since primary recourse to the PCHC does not
preclude an appeal to the regional trial courts on questions of law. Section 13 of the PCHC Rules reads:

Sec. 13. The findings of facts of the decision or award rendered by the Arbitration Committee or by the sole Arbitrator as the case
may be shall be final and conclusive upon all the parties in said arbitration dispute. The decision or award of the Arbitration
Committee or of the Sole Arbitrator shall be appealable only on questions of law to any of the Regional Trial Courts in the National
Capital Judicial Region where the Head Office of any of the parties is located. The appellant shall perfect his appeal by filing a notice
of appeal to the Arbitration Secretariat and filing a Petition with the Regional Trial Court of the National Capital Region xxx.

Furthermore, when the error is so patent, gross and prejudicial as to constitute grave abuse of discretion, courts may address
questions of fact already decided by the arbitrator.[9]

We are not unaware of the rule that a trial court, which has jurisdiction over the main action, also has jurisdiction over the third
party complaint, even if the said court would have had no jurisdiction over it had it been filed as an independent action.[10] However,
this doctrine does not apply in the case of banks, which have given written and subscribed consent to arbitration under the auspices
of the PCHC.

By participating in the clearing operations of the PCHC, petitioner agreed to submit disputes of this nature to arbitration.
Accordingly, it cannot invoke the jurisdiction of the trial courts without a prior recourse to the PCHC Arbitration Committee. Having
given its free and voluntary consent to the arbitration clause, petitioner cannot unilaterally take it back according to its whim. In the
world of commerce, especially in the field of banking, the promised word is crucial. Once given, it may no longer be broken.

Upon the other hand, 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.

In view of the foregoing, a discussion of the issues raised by the petitioners is unnecessary.

WHEREFORE, the petition is DENIED for lack of merit. Costs against petitioner.