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Republic of the PhilippinesSUPREME COURTManila

EN BANC

G.R. No. L-!"#$ Octobe% & !$#

TEO'ORO (EGA& plaintiff-appellee&)s.T*E SAN CARLOS M+LL+NG CO.& LT'.& ,efen,ant-appellant.

ishe%& 'eitt& Pe%/ins& 0 B%a,1& 2ohn R. Mcie& 2%.& 2esus T%ini,a,& an, Poell 0 *illfo% appellant.R. Nolan an, e%ia 0 La O fo% appellee.

ROMUAL'E3& 2.4

This action is fo% the %eco)e%1 of 5&$"$ /ilos of cent%ifu6al su6a%& o% its )alue&P7&"& plus the pa18ent of P"99 ,a8a6es an, the costs.

The ,efen,ants file, an anse%& an, set up to special ,efenses& the fi%st ofhich is at the sa8e ti8e a counte%clai8.

The Cou%t of i%st +nstance of Occi,ental Ne6%os that t%ie, the case& %en,e%e,

:u,68ent& the ,ispositi)e pa%t of hich is as follos4

B1 )i%tue of these consi,e%ations& the cou%t is of opinion that ith %espect to theco8plaint& the plaintiff 8ust be hel, to ha)e a bette% %i6ht to the possession of the5&$"$ /ilos of cent%ifu6al su6a% 8anufactu%e, in the ,efen,ants; cent%al an, the latte%is sentence, to ,eli)e% the8 to the plaintiff& an, in ,efault& the sellin6 p%ice the%eof&a8ountin6 to P"&$

e%e cause, an, suffe%e, b1 ,efen,ant& since the %it of attach8ent issue, in thiscase as le6al an, p%ope%. =ithout p%onounce8ent as to costs.

So o%,e%e,.

The ,efen,ant co8pan1 appeale, f%o8 this :u,68ent& an, alle6es that the

loe% cou%t e%%e, in ha)in6 hel, itself ith :u%is,iction to ta/e co6ni>ance of an, %en,e%:u,68ent in the cause? in hol,in6 that the ,efen,ant as boun, to suppl1 ca%s6%atuitousl1 to the plaintiff fo% the cane? in not o%,e%in6 the plaintiff to pa1 to the,efen,ant the su8 of P&

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ith ca%s to t%anspo%t cane f%o8 his fiel,s to the b%anch lines a6%ee, upon on itsestate.

But on Ma%ch !

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Rulin6 of the Cou%t of Appeals

Affi%8in6 the t%ial cou%t& the CA hel, that petitione%s cannot %el1 on Section "& Rule !77of the p%e-!$$ Rules of Cou%t& because a Motion to 'is8iss ha, p%e)iousl1 beenfile,. u%the%& it %ule, that the a%bit%ation clause p%o)i,e, in the cha%te% pa%t1 ,i, notbin, %espon,ent. +t %easone, as follos4

FPetitione%s a%6ue that Ithe RTCJ co88itte, 6%a)e abuse of ,isc%etion a8ountin6 tolac/ o% e@cess of :u%is,iction in ,en1in6 the p%eli8ina%1 hea%in6 of the affi%8ati)e,efense of lac/ of cause of action fo% failu%e to co8pl1 ith the a%bit%ation clause.

FPetitione%s& in so filin6 the Motion to Set fo% P%eli8ina%1 *ea%in6 the Affi%8ati)e'efense of Lac/ of Cause of Action fo% ailu%e to Co8pl1 ith A%bit%ation Clause&p%e8ise, thei% alle6e, %i6ht to a p%eli8ina%1 hea%in6 on the p%o)ision of Section "& Rule!7 of the Ol, Rules of Cou%t hich p%o)i,eIsJ4

Sec. ". Plea,in6 6%oun,s as affi%8ati)e ,efenses. An1 of the 6%oun,s fo% ,is8issalp%o)i,e, fo% in this %ule& e@cept i8p%ope% )enue& 8a1 be plea,e, as an affi%8ati)e,efense an, a p%eli8ina%1 hea%in6 8a1 be ha, the%eon as if a 8otion to ,is8iss ha,been file,.K

FPetitione%sK %eliance on sai, p%o)ision is 8isplace,. The abo)e-8entione, p%o)isionconte8plates a situation he%e no 8otion to ,is8iss is file,. +f a 8otion to ,is8iss hasbeen file,& as in the case at ba%& Section "& Rule !7 of the Ol, Rules of Cou%t ill notco8e into pla1. u%the%8o%e& the sa8e p%o)ision 6i)es the :u,6e ,isc%etion hethe% toset fo% p%eli8ina%1 hea%in6 the 6%oun,s fo% affi%8ati)e ,efenses. Respon,ent :u,6e,efe%%e, the hea%in6 an, ,ete%8ination of the Motion to 'is8iss until the t%ial since the

6%oun, %elie, upon b1 petitione%s the%ein ,i, not appea% to be in,ubitable. Petitione%sthen file, thei% Anse% as o%,e%e, b1 the Cou%t a6ain %aisin6 as an affi%8ati)e ,efenselac/ of cause of action fo% failu%e to co8pl1 ith ItheJ a%bit%ation clause& p%a1in6 fo% the,is8issal of the co8plaint a6ainst the8& an, filin6 afte%a%,s a Motion to Set fo%P%eli8ina%1 *ea%in6 the Affi%8ati)e 'efense of lac/ of Cause of Action. +n effect&petitione%s a%e as/in6 the t%ial cou%t to set asi,e its O%,e% ,en1in6 the Motion to'is8iss an, O%,e% ,en1in6 the Motion fo% Reconsi,e%ation the%eof.

FPetitione%s cannot ,o this.

FThe %e8e,1 of the a66%ie)e, pa%t1 in a ,enie, 8otion to ,is8iss is to file an anse%an, inte%pose as ,efense o% ,efenses& the ob:ection o% ob:ections %aise, b1 hi8 in sai,8otion to ,is8iss& then p%ocee, to t%ial an,& in case of a,)e%se ,ecision& to ele)ate theenti%e case b1 appeal in ,ue cou%se. Petitione%s coul, also %eso%t to the e@t%ao%,ina%1le6al %e8e,ies of ce%tio%a%i& p%ohibition an, 8an,a8us to Duestion the ,enial of the8otion to ,is8iss. As co%%ectl1 %ule, b1 the t%ial cou%t in its O%,e% ,ate, 2une 59& !$$5&,en1in6 the Motion fo% Reconsi,e%ation of the O%,e% ,ate, No)e8be% !!& !$$

,en1in6 the Motion to 'is8iss the 6%oun, %elie, upon b1 petitione%s is a 8atte% of,efense hich petitione%s 8ust p%o)e ith thei% e)i,ence at the t%ial.

FPetitione%s in as/in6 the loe% cou%t to set the case fo% p%eli8ina%1 hea%in6 fu%the%a%6ue that this oul, 6i)e the cou%t an, the pa%ties a sho%te% ti8e to %esol)e the 8atte%an, the case ithout a full blon t%ial. *oe)e%& petitione%s fail to %eali>e that the1the8sel)es a%e ,ela1in6 the ,ete%8ination an, %esolution of the issues in)ol)e, b1%eso%tin6 to an i8p%ope% %e8e,1.

FOn the issue %aise, b1 petitione%s that p%i)ate %espon,entKs clai8 is p%e8atu%e fo%failu%e to co8pl1 ith ItheJ a%bit%ation clause& e hol, that the %i6ht of the %espon,entas sub%o6ee& in filin6 the co8plaint a6ainst he%ein petitions is not ,epen,ent upon thecha%te% pa%t1 %elie, upon b1 petitione%s? no% ,oes it 6%o out of an1 p%i)it1 cont%act o%upon %itten assi6n8ent of clai8. +t acc%ues si8pl1 upon pa18ent of the insu%anceclai8 b1 %espon,ent as insu%e% to the insu%e,. This as the p%onounce8ent b1 theSup%e8e Cou%t in the case of Pan Mala1an +nsu%ance Co%p. )s. Cou%t of Appeals !

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Consi,e%in6 that the%e as onl1 one Duestion& hich 8a1 e)en be ,ee8e, to be the)e%1 touchstone of the hole case& the t%ial cou%t ha, no co6ent %eason to ,en1 theMotion fo% P%eli8ina%1 *ea%in6. +n,ee,& it co88itte, 6%a)e abuse of ,isc%etion hen it,enie, a p%eli8ina%1 hea%in6 on a si8ple issue of fact that coul, ha)e possibl1 settle,the enti%e case. (e%il1& he%e a p%eli8ina%1 hea%in6 appea%s to suffice& the%e is no%eason to 6o on to t%ial. One %eason h1 ,oc/ets of t%ial cou%ts a%e clo66e, is theun%easonable %efusal to use a p%ocess o% p%oce,u%e& li/e a 8otion to ,is8iss& hich is,esi6ne, to abb%e)iate the %esolution of a case.

Secon, +ssue4 The A%bit%ation Clause

The CA also e%%e, hen it hel, that the a%bit%ation clause as not bin,in6 on%espon,ent. =e %eite%ate that the c%u@ of this case is hethe% the t%ial cou%t co88itte,6%a)e abuse of ,isc%etion in ,en1in6 the afo%ecite, Motion. The%e as neithe% nee,no% %eason to %ule on the applicabilit1 of the a%bit%ation clause.

Be that as it 8a1& e fin, the CAKs %easonin6 on this point fault1. Citin6 Pan Mala1an+nsu%ance Co%po%ation ). CA&! it %ule, that the %i6ht of %espon,ent insu%ance co8pan1as sub%o6ee as not base, on the cha%te% pa%t1 o% an1 othe% cont%act? %athe%& itacc%ue, upon the pa18ent of the insu%ance clai8 b1 p%i)ate %espon,ent to the insu%e,consi6nee. The%e as nothin6 in Pan Mala1an& hoe)e%& that p%ohibite, theapplicabilit1 of the a%bit%ation clause to the sub%o6ee. That case 8e%el1 ,iscusse,&inte% alia& the acc%ual of the %i6ht of sub%o6ation an, the le6al basis the%efo%.!< Thisissue is co8pletel1 ,iffe%ent f%o8 that of the conseDuences of such sub%o6ation? thatis& the %i6hts that the insu%e% acDui%es f%o8 the insu%e, upon pa18ent of the in,e8nit1.

=*EREORE& the Petition is GRANTE' an, the appeale, 'ecision is he%eb1

RE(ERSE'. The case is REMAN'E' to the t%ial cou%t fo% p%eli8ina%1 hea%in6 onpetitione%sK affi%8ati)e ,efense. No costs.

SO OR'ERE'.

Republic of the PhilippinesSUPREME COURTManila

+RST '+(+S+ON

G.R. No. !9$!< 2une !#& !$$#

ASSOC+ATE' BAN& petitione%&)s.

*ON. COURT O APPEALS& *ON. MAR+NA L. BU3ON& as P%esi,in6 2u,6e of RTC&ue>on Cit1& MM& B%. $!& (+S+TAC+ON SERRA LORES RTC& ue>on Cit1& MM& B%.$!& MA. ASUNC+ON LORES& P*+L+PP+NE COMMERC+AL +NTERNAT+ONAL BAN&AR EAST BAN 0 TRUST CO.& SECUR+TH BAN 0 TRUST CO. an, C+THTRUSTBAN+NG CORPORAT+ON& %espon,ents.

Soluta& Leoni,as& Ma%ifosDue& Balce& Santia6o 0 A6uila La Office fo% petitione%.

Recto% La Office fo% %espon,ent lo%es.

Bal6os an, Pe%e> La Office fo% %espon,ent PC+B.

'u8a%aos& O%acion& Pan6aniban 0 Associates fo% %espon,ent EBTC.

Cauton& Bana%es& Ca%pio& +shiata an, Associates fo% %espon,ent SBTC.

Gon>a6a& Sone:a an, Gale La Offices fo% %espon,ent Cit1t%ust.

APUNAN& 2.4

This is a petition fo% %e)ie on ce%tio%a%i see/in6 the %e)e%sal of the ,ecision of theCou%t of Appeals on No)e8be% !on Cit1& B%anch $! ,is8issin6 the petitione%Ks thi%,-pa%t1 co8plainta6ainst p%i)ate %espon,ent ban/s fo% lac/ of :u%is,iction.

The facts of the case& as foun, b1 both the t%ial cou%t an, the Cou%t of Appeals a%eun,ispute,4

+n a co8plaint fo% (iolation of the Ne6otiable +nst%u8ent La an, 'a8a6es& plaintiffs !see/ the %eco)e%1 of the a8ount of P$99&$!5.79 hich ,efen,ant ban/ cha%6e,

a6ainst thei% cu%%ent account b1 )i%tue of the si@teen !7 chec/s ,%an b1 the8,espite the appa%ent alte%ations the%ein ith %espect to the na8e of the pa1ee& that isthe na8e ilipinas Shell as e%ase, an, substitute, ith E)e% T%a,in6 an, 'BLT%a,in6 b1 thei% supe%)iso% 2e%e8ias Cab%e%a& ithout thei% /nole,6e an, consent.

Anse%in6 the co8plaint& ,efen,ant ban/ clai8e, that the sub:ect chec/s appea%e, toha)e been %e6ula%l1 issue, an, f%ee f%o8 an1 i%%e6ula%it1 hich oul, e@cite o% a%ousean1 suspicion o% a%%ant thei% ,ishono% hen the sa8e e%e ne6otiate, an, hono%e,b1 it? that it obse%)e, an, e@e%cise, the %eDui%e, ,ili6ence& ca%e an, the p%esc%ibe,stan,a%, )e%ification p%oce,u%es befo%e finall1 acceptin6 an, hono%in6 the sub:ecchec/s an, that the p%o@i8ate cause of plaintiffsK loss& if an1& as thei% on la@it1ne6li6ence an, lac/ of cont%ol& ,ue ca%e an, ,ili6ence in the con,uct of thei% businessaffai%s.

=ith lea)e of cou%t& ,efen,ant ban/ file, a Thi%,-Pa%t1 Co8plaint a6ainst PhilippineCo88e%cial +nte%national Ban/& a% East Ban/ 0 T%ust Co8pan1& Secu%it1 Ban/ an,T%ust Co8pan1 an, Cit1t%ust Ban/in6 Co%po%ation fo% %ei8bu%se8ent& cont%ibutionin,e8nit1 f%o8 sai, thi%,-pa%t1 ,efen,ants fo% bein6 the collectin6 ban/s of the sub:ecchec/s an, b1 )i%tue of thei% ban/ 6ua%antee fo% all chec/s sent fo% clea%in6 to thePhilippine Clea%in6 *ouse Co%po%ation PC*C& as p%o)i,e, fo% in Section !& PC*Cas p%o)i,e, fo% in Section !& PC*C Clea%in6 *ouse Rules an, Re6ulations.

+n its Anse% to the Thi%,-Pa%t1 Co8plaint& Cit1t%ust Ban/in6 Co%po%ation a)e%%e, thathe sub:ect chec/s appea%e, to be co8plete an, %e6ula% on thei% face ith noin,ication that an o%i6inal pa1eeKs na8e as e%ase, an, supe%i8pose, ith anothe%that plaintiffsK fault an, ne6li6ence in failin6 to e@a8ine thei% 8onthl1 ban/ state8entsto6ethe% ith the %etu%ne, chec/s an, thei% on chec/ stubs& put the8 un,e% estoppe

an, cannot %eco)e% the p%ocee,s of the chec/s a6ainst it& an innocent thi%,-pa%t1& an,plaintiff 8ust suffe% the loss as thei% ne6li6ence as the p%o@i8ate cause the%eof? an,that thi%, pa%t1 plaintiff is ba%%e, f%o8 %eco)e%in6 f%o8 it base on the p%o)isions oSections 9 an, ! of the Philippine Clea%in6 Rules an, Re6ulations.

Philippine Co88e%cial +nte%national Ban/ alle6e, that the sub:ect chec/ as co8pletean, %e6ula% on its face an, as pai, b1 it onl1 upon p%esent8ent to the ,%aee ban/fo% clea%in6 ho& upon e@a8ination the%eof& foun, the sa8e to be co8plete an,%e6ula% on its face? that it as onl1 afte% sai, chec/ as clea%e, b1 thi%,-pa%t1 plaintiffo% pa18ent that it alloe, the pa1ee to ith,%a the p%ocee,s of the chec/ f%o8 itsaccount? that the cause of action of the thi%,-pa%t1 plaintiff is ba%%e, b1 estoppel an,olaches fo% its failu%e to %etu%n the chec/ to it ithin the pe%io, p%o)i,e, fo% un,eClea%in6 *ouse Rules an, Re6ulations? that this Cou%t has no :u%is,iction o)e% the suias it an, thi%,-pa%t1 plaintiff a%e 8e8be%s of the Philippine Clea%in6 *ouse an, boun,b1 the Rules an, Re6ulations the%eof p%o)i,in6 fo% a%bit%ation.

A Motion To 'is8iss as file, b1 Secu%it1 Ban/ an, T%ust Co8pan1 on the 6%oun,s

that thi%,-pa%t1 plaintiff faile, to %eso%t to a%bit%ation as p%o)i,e, fo% in Section 57 of theClea%in6 *ouse Rules an, Re6ulations of the Philippine Clea%in6 *ouse Co%po%ationan, that it as %elease, f%o8 an1 liabilit1 ith the acceptance b1 thi%,-pa%t1 plaintiff othe sub:ect chec/.

The %eco%, ,oes not sho of an1 Anse% to the Thi%,-Pa%t1 Co8plaint ha)in6 beenfile, b1 a% East Ban/ 0 T%ust Co8pan1& althou6h a FRepl1 To EBTC Anse%F asfile, b1 thi%,-pa%t1 plaintiff.

On the othe% han,& thi%,-pa%t1 plaintiff 8aintains that this Cou%t has :u%is,iction o)e% thesuit as the p%o)isions of the Clea%in6 *ouse Rules an, Re6ulations a%e applicable onl1if the suit o% action is beteen pa%ticipatin6 8e8be% ban/s& he%eas the plaintiffs a%ep%i)ate pe%sons an, the thi%,-pa%t1 co8plaint beteen pa%ticipatin6 8e8be% ban/s isonl1 a conseDuence of the o%i6inal action initiate, b1 the plaintiffs. 5

The t%ial cou%t ,is8isse, the thi%,-pa%t1 co8plaint fo% lac/ of :u%is,iction citin6 Section57 of the Clea%in6 *ouse Rules an, Re6ulations of the PC*C p%o)i,in6 fo% settle8enof ,isputes an, cont%o)e%sies in)ol)in6 an1 chec/ o% ite8 clea%e, th%ou6h the bo,1

ith the PC*C. +t %ule, citin6 the A%bit%ation Rules of P%oce,u%e that the ,ecisiono% aa%, of the PC*C th%ou6h its a%bit%ation co88itteea%bit%ato% is appealable onl1 onDuestions of la to an1 of the Re6ional T%ial Cou%ts in the National Capital Re6ion

he%e the hea, office of an1 of the pa%ties is locate,. #

On the plaintiffsK contention that :u%is,iction )ests ith the cou%t onl1 if the suit o% actionis beteen pa%ticipatin6 8e8be% ban/s ithout the in)ol)e8ent of p%i)ate pa%ties thet%ial cou%t hel,4

The thi%,-pa%t1 co8plaint conce%nin6 a ,ispute o% cont%o)e%s1 a8on6 clea%in6pa%ticipants in)ol)in6 the sub:ect chec/s clea%e, th%ou6h PC*C is actuall1in,epen,ent of& sepa%ate an, ,istinct f%o8 the plaintiffKs co8plaint. . . .

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As the plaintiffs a%e not pa%ties to the thi%, pa%t1 co8plaint& the p%o)isions of theclea%in6 house %ules an, %e6ulations on a%bit%ation a%e& the%efo%e& applicable to Thi%,-Pa%t1 plaintiff an, thi%, pa%t1 ,efen,ant. ConseDuentl1 this cou%t has no :u%is,ictiono)e% the thi%, pa%t1 co8plaint. "

Afte% the t%ial cou%t ,enie, plaintiffs Motion fo% Reconsi,e%ation& 7 petitione% appeale,to the Cou%t of Appeals hich p%o8ul6ate, the challen6e, ,ecision on No)e8be% !

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This petition fo% %e)ie on ce%tio%a%i see/s to %e)e%se the ,ecision of the Cou%t ofAppeals ,is8issin6& in CA-G.R. SP. No. 9

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inc%ease suffice it to state that the p%inciple %eDui%in6 the p%e)ious e@haustion ofa,8inist%ati)e %e8e,ies is not applicable hen the %espon,ent is a ,epa%t8entsec%eta%1 hose act as an alte%-e6o of the P%esi,ent bea%s the i8plie, o% assu8e,app%o)al of the latte% Ani8os )s. Phil. (ete%ans Affai%s Office& !# SCRA !#.. 5

+n the he%ein petition fo% %e)ie on ce%tio%a%i befo%e this Cou%t& petitione%s fo%8ulate thesole issue of hethe% o% not the cou%t a Duo has acte, ithin its :u%is,iction in issuin6the Duestione, o%,e% an,& in the affi%8ati)e& hethe% o% not it has co88itte, 6%a)eabuse of ,isc%etion specificall1 in 6%antin6 p%i)ate %espon,ent;s application fo% a %it ofp%eli8ina%1 in:unction.

=e see 8e%it in the petition.

The pe%tinent p%o)isions of Republic Act No. 7ance o)e% the case in,is%e6a%, of the ,oct%ine of p%i8a%1 :u%is,iction. #

Neithe% can e t%eat the case as a special ci)il action fo% ce%tio%a%i o% p%ohibition as theco8plaint file, b1 p%i)ate %espon,ent ith the cou%t a Duo& contains no alle6ation olac/& o% 6%a)e abuse in the e@e%cise& of :u%is,iction on the pa%t of 'ECS no% has the%ebeen an1 fin,in6 8a,e to that effect b1 eithe% the cou%t a Duo o% the appellate cou%tthat coul, a%%ant the e@t%ao%,ina%1 %e8e,1. A special ci)il action& eithe% fo% ce%tio%a%o% p%ohibition& can be 6%oun,e, onl1 on eithe% lac/ of :u%is,iction o% 6%a)e abuse o,isc%etion. "

+n passin6& e also obse%)e that the pa%ties ha)e both %e8aine, silent on thep%o)isions of Republic Act No. 7< to the effect that in case of ,isa6%ee8ent ontuition fee inc%eases in this instance b1 he%ein p%i)ate pa%ties& the issue shoul, be%esol)e, th%ou6h a%bit%ation. Althou6h the 8atte% has not been %aise, b1 the pa%ties& iis an aspect& ne)e%theless& in ou% )ie& that coul, ha)e ell been e@plo%e, b1 the8instea, of i88e,iatel1 in)o/in6& such as the1 appa%entl1 ,i,& the a,8inist%ati)e an,

:u,icial %elief to %esol)e the cont%o)e%s1.

All tol,& e hol, that the cou%t a Duo has been be%eft of :u%is,iction in ta/inco6ni>ance of p%i)ate %espon,ent;s co8plaint. =e see no %eal :ustification& on thebasis of the factual an, case settin6s he%e obtainin6& to pe%8it a ,e)iation f%o8 thelon6 stan,in6 %ule that the issue of :u%is,iction 8a1 be %aise, at an1 ti8e e)en onappeal.

=*EREORE& confo%8abl1 ith ou% abo)e opinion& the instant petition is GRANTE'an, the Duestione, o%,e%e, of the cou%t a Duo an, the ,ecision of the appellate cou%a%e SET AS+'E. No costs.

SO OR'ERE'.

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