ASSOCIATED BANK VS COURT OF APPEALS (ADR Case No. 8)

ASSOCIATED BANK VS COURT OF APPEALS
GR NO. 107918, JUNE 14, 1994
FACTS:
Four banks, namely Philippine Commercial International Bank (PCIB), Far East Bank and Trust
company (FEBTC), Security Bank and Trust Company (SBTC) and Citytrust Banking corporation
(CBC) files a complaint for Violation of the Negotiable Instrument Law and Damages because
defendant bank charged against their current account sixteen (16) checks drawn by them
amounting to P900,913.60 despite the apparent alteration, Payee Filipinas Shell was erased and
substituted with Ever Trading and DBL Trading by their supervisor Jeremias Cabrera, without their
knowledge and consent. The Defendant bank claimed that the subject checks appeared to have
been regularly issued and the proximate loss of those banks was because of their own laxity,
negligence and lack of control, due care and diligence in the conduct of their business affairs.
With leave of court, defendant bank filed a Third-Party Complaint against those four banks, for
reimbursement, contribution, indemnity from said third-party defendants for being the collecting
banks of the subject checks and by virtue of their bank guarantee for all checks sent for clearing to
the Philippine Clearing House Corporation (PCHC) as provided in their rules. In their answers to
this third party complaint, one of the PCIB arguments: that the court has no jurisdiction over the
suit as it and third-party plaintiff are members of the Philippine Clearing House and bound by the
Rules and Regulations thereof providing for arbitration. Likewise, A Motion To Dismiss was filed by
Security Bank and Trust Company on the grounds that third-party plaintiff failed to resort to
arbitration as provided by the Philippine Clearing House Corporation (PCHC).
The trial court dismissed the third-party complaint for lack of jurisdiction, citing Section 36 of the
Clearing House Rules and Regulations of the PCHC, for settlement of disputes and controversies
involving any check or item cleared through the body with the PCHC and the decision or award of
the PCHC Arbitrator is appealable only on questions of law to any of the Regional Trial Courts in the
National Capital Region where the head office of any of the parties is located. After the trial court
denied plaintiffs Motion for Reconsideration, 6petitioner appealed to the Court of Appeals which
likewise denied the petition. Undaunted, petitioner brought the matter before the supreme court
seeking a review of the respondent court’s decision.
ISSUE: Whether or not the arbitration provision of the clearing house rules and regulations of the
PCHC (section 36) is applicable in the case at bar.
RULING:
Yes, said arbitration provision is applicable to the case at bar. Under the rules and regulations of the
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 then as a result, the
said 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. With this circumstance, Associated Bank 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. The Court
recognized that PCHC Rules and Regulations allow appeal to the Regional Trial Courts only on
questions of law, but this does not preclude our lower courts from dealing with questions of fact
already decided by the PCHC arbitration when warranted and appropriate. The Court emphasized
section 36.6: The fact that a bank participates in the clearing operations of 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. Therefore, the petitioner 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
Supreme DENIED the petition for lack of merit.

ASSOCIATED BANK VS COURT OF APPEALS (ADR Case No. 8)

Uploaded by

Copyright:

Available Formats

ASSOCIATED BANK VS COURT OF APPEALS (ADR Case No. 8)

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

ASSOCIATED BANK VS COURT OF APPEALS (ADR Case No. 8)

Uploaded by

Copyright:

Available Formats

ASSOCIATED BANK VS COURT OF APPEALS

GR NO. 107918, JUNE 14, 1994

You might also like