Insular Savings Bank v. Far East Bank
REITERATIONFacts
The Antecedents: Far East Bank and Trust Company (Respondent) initiated arbitration proceedings before the Philippine Clearing House Corporation's (PCHC) Arbitration Committee against Home Bankers Trust and Company (HBTC), seeking to recover P25,200,000.00. This amount represented three checks drawn and debited against Respondent's account, which HBTC had presented for clearing. Respondent dishonored these checks due to insufficient funds and returned them, but HBTC refused to accept them as they were returned beyond the reglementary clearing period. Procedural History: While the arbitration was ongoing, Respondent filed a separate civil case for Sum of Money and Damages with Preliminary Attachment against HBTC and its officers/depositors before the Regional Trial Court (RTC) of Makati City. The RTC initially suspended proceedings in this civil case pending the arbitration award. After the PCHC Arbitration Committee rendered a decision in favor of Respondent, awarding P12,600,000.00 plus interest, Petitioner (as successor-in-interest of HBTC) filed a petition for review of this arbitral award. Crucially, Petitioner filed this petition for review within the existing Civil Case No. 92-145, instead of initiating a new case. The RTC dismissed this petition for review, citing lack of jurisdiction because it was not docketed as a separate initiatory pleading, and subsequently denied Petitioner's motion for reconsideration. The Petition: Petitioner seeks review of the RTC's dismissal of its petition for review, arguing that the RTC erred in dismissing the case for lack of jurisdiction on the ground that it should have been docketed as a separate action. Petitioner contends that Civil Case No. 92-145 was merely suspended and that filing the petition for review within this existing case was the proper procedure to avoid multiplicity of suits. The core of the dispute revolves around the correct procedural avenue for appealing an arbitral award and the jurisdiction of the RTC in such matters.
Issue(s)
Whether the Regional Trial Court erred in dismissing the petition for review for lack of jurisdiction on the ground that it should have been docketed as a separate case; specifically, whether the RTC had jurisdiction to review the arbitral award as a petition for review. Whether the argument regarding multiplicity of suits has merit, considering the RTC's dismissal and the proper avenue for appealing the arbitral award.
Ruling
The petition is denied. The November 9, 1999 Order of the Regional Trial Court of Makati City, Branch 135, dismissing the petition for review for lack of jurisdiction and the February 1, 2000 Order denying its reconsideration, are affirmed.
Ratio Decidendi
On the issue of the RTC's jurisdiction to review the arbitral award and the dismissal of the petition: The Court held that the RTC did not err in dismissing the petition for review for lack of jurisdiction. While the PCHC Rules provide for an appeal on questions of law to the RTC, such rules cannot confer jurisdiction where none exists by law. Jurisdiction over the subject matter is conferred by law, not by agreement of the parties or by erroneous belief of the court. The proper recourse for HBTC from the denial of its motion for reconsideration by the Arbitration Committee was to file either a motion to vacate the arbitral award with the RTC, a petition for review with the Court of Appeals under Rule 43 of the Rules of Court on questions of fact, law, or mixed questions, or a petition for certiorari under Rule 65 of the Rules of Court with the Court of Appeals on grounds of grave abuse of discretion. The RTC's jurisdiction is limited to hearing motions to vacate arbitral awards. Filing a petition for review with the RTC when it should have been filed with the Court of Appeals under Rule 43 is a procedural error that deprives the RTC of jurisdiction. On the issue of docketing the petition as a separate case and the argument regarding multiplicity of suits: The Court found HBTC's argument regarding the multiplicity of suits to be without merit. It clarified that the RTC's dismissal was not on the ground that the petition should have been a separate case, but on the necessity of filing the correct petition in the proper court. Whether the petition for review was filed in Civil Case No. 92-145 as an appeal of the arbitral award or as a separate case, the RTC would still lack jurisdiction to entertain it as a petition for review. The RTC's authority is limited to vacating awards, while appellate review of arbitral awards on questions of law or fact, or mixed questions, falls under the jurisdiction of the Court of Appeals.
Main Doctrine
A petition for review of an arbitral award under the PCHC Rules must be filed with the Court of Appeals, not the Regional Trial Court, unless it is a motion to vacate the award. The RTC only has jurisdiction to hear motions to vacate arbitral awards.