G.R. No. 115412 November 19, 1999
HOME BANKERS SAVINGS AND TRUST COMPANY, petitioner, vs. COURT OF APPEALS and FAR EAST BANK & TRUST CO., INC., respondents.

FACTS

Victor Tancuan issued a Home Bankers Savings and Trust Company (HBSTC) check for P25,250,000.00, while Eugene Arriesgado issued three Far East Bank and Trust Company (FEBTC) checks totaling P25,200,000.00. The parties exchanged and deposited these checks. HBSTC dishonored Tancuan’s check for insufficient funds. FEBTC, upon presentment, also dishonored Arriesgado’s checks for the same reason. HBSTC received the notice of dishonor but refused to accept the return of the checks, deeming them cleared and allowing withdrawal of the proceeds. FEBTC demanded reimbursement, which HBSTC refused. Consequently, FEBTC initiated arbitration before the Philippine Clearing House Corporation (PCHC) Arbitration Committee on December 12, 1991.
While the arbitration was pending, FEBTC filed a civil action for sum of money and damages with preliminary attachment against HBSTC and others before the Regional Trial Court (RTC) of Makati on January 17, 1992. HBSTC moved to dismiss the complaint, arguing it stated no cause of action as it sought to enforce a non-existent arbitral award and was barred by litis pendentia due to the ongoing arbitration. The RTC denied the motion to dismiss and the subsequent motion for reconsideration. The Court of Appeals affirmed the RTC, holding that FEBTC’s complaint sought to collect a sum of money, not to enforce an arbitral award, and that a pending arbitration does not preclude a party from seeking conservatory reliefs like preliminary attachment from the court.

ISSUE

Whether the trial court committed grave abuse of discretion in denying HBSTC’s motion to dismiss the civil case despite the pendency of the arbitration proceedings.

RULING

The Supreme Court dismissed the petition and affirmed the Court of Appeals. The legal logic is anchored on the interpretation of the Arbitration Law (Republic Act No. 876) and the nature of the action filed. The Court clarified that FEBTC’s complaint was an independent action for sum of money and damages, not an action to enforce an arbitral award. Section 14 of the Arbitration Law explicitly allows a party to petition the court for an attachment against property as a provisional remedy in connection with any arbitral proceeding. Therefore, FEBTC’s filing for a writ of preliminary attachment was a permissible conservatory relief that necessitated the reiteration of its main cause of action in court.
The Court distinguished the case from Puromines, Inc. v. Court of Appeals, cited by HBSTC, which mandated dismissal when a party files a court action without first resorting to a contracted arbitration. Here, arbitration had already been initiated. The ruling in National Union Fire Insurance Company v. Stolt-Nielsen Philippines, Inc., which states that a court action should be suspended, not dismissed, when arbitration is a condition precedent, was deemed more applicable. The Court emphasized that arbitration is encouraged to expedite dispute resolution, but this policy does not preclude a party from seeking interim judicial relief to preserve the status quo or ensure the effectiveness of a future award. Consequently, the pending arbitration did not justify the dismissal of the civil case but merely called for its suspension, allowing the ancillary remedy of attachment to proceed.