G.R. No. 121171 , December 29, 1998
Asset Privatization Trust, petitioner, vs. Court of Appeals, Jesus S. Cabarrus, Sr., et al., respondents.

FACTS

Marinduque Mining and Industrial Corporation (MMIC) had substantial loans from PNB and DBP, secured by mortgages on its assets. After MMIC defaulted, the creditor banks initiated extrajudicial foreclosure. Minority stockholders of MMIC filed a derivative suit (Civil Case No. 9900) before the Makati RTC, Branch 62, seeking annulment of the foreclosure. The Asset Privatization Trust (APT), which had assumed the banks’ interests, was substituted as defendant. The parties subsequently entered into a Compromise and Arbitration Agreement, which the trial court approved in an order dated October 14, 1992. This order dismissed the complaint, approved the agreement, and noted the transformation of the claims into pure money claims to be settled by arbitration.
The arbitration committee later ruled in favor of MMIC, awarding substantial damages. MMIC then filed in the original Civil Case No. 9900 a motion for confirmation of the arbitral award. APT opposed, arguing that Branch 62 had lost jurisdiction after dismissing the case and that the award exceeded the arbitrable issues. The trial court confirmed the award. APT filed a petition for certiorari with the Court of Appeals, which was dismissed. APT then elevated the case to the Supreme Court via a petition for review on certiorari.

ISSUE

The primary issue is whether the Makati RTC, Branch 62, retained jurisdiction to confirm the arbitral award after having issued an order that dismissed the original complaint upon the parties’ submission to arbitration.

RULING

Justice Romero, in a dissenting opinion, argued that the petition should be dismissed and that the Court of Appeals’ decision be affirmed. The legal logic centers on the finality of the Compromise and Arbitration Agreement and the jurisdictional consequences of its judicial approval. The October 14, 1992 order of Branch 62 did not constitute a simple dismissal that terminated the court’s jurisdiction. Instead, by approving the parties’ agreement, which expressly provided for the finality of the arbitral award and its subsequent enforcement in court under Republic Act No. 876 , the trial court retained residual jurisdiction to enforce the award’s terms. The agreement and the order transformed the suit into a submission for arbitration, with the court maintaining a supervisory role to ensure the award’s execution.
Furthermore, the dissent emphasized that APT’s procedural recourse was flawed. After the trial court denied its motion for reconsideration of the order confirming the award, APT’s proper remedy was an ordinary appeal, not a special civil action for certiorari. By filing the wrong action, APT failed to avail itself of the correct remedy within the reglementary period. The Court of Appeals correctly treated the petition before it as an appeal, found it filed out of time, and thus properly dismissed it. To rule otherwise would undermine the finality and efficiency of arbitration as an alternative dispute resolution mechanism, contravening the parties’ contractual intent and the governing law.