G.R. No. 166260 , February 18, 2009
Metropolitan Bank & Trust Company, Petitioner, vs. The Honorable Court of Appeals and United Overseas Bank (formerly known as Westmont Bank), Respondents.

FACTS

Check No. 08012663814 dated January 13, 1997, payable to cash and drawn against the account of Bienvenido C. Tan with petitioner Metropolitan Bank & Trust Company (Metrobank), was deposited with respondent United Overseas Bank (UOB). The check was forwarded for clearing on January 14, 1997, through the Philippine Clearing House Corporation (PCHC), and Metrobank cleared it on the same date. However, on January 27, 1997, Metrobank informed UOB it was returning the check due to material alteration—the date was changed from “January 23, 1997” to “January 13, 1997,” and the amount from “₱1,000.00” to “₱91,000.00.” UOB refused to accept the return and reimburse Metrobank. Consequently, on July 18, 1997, Metrobank filed a complaint (Arbicom Case No. 97-093) before the PCHC Arbitration Committee, arguing UOB had a duty to examine the check for alterations and should bear the loss due to its failure to exercise due diligence. UOB countered that it exercised due diligence and that Metrobank failed to comply with the 24-hour clearing house rule and cleared the check with gross negligence.
On November 11, 1997, the Arbitration Committee directed Metrobank to submit the check to the PNP Crime Laboratory for examination. Metrobank subsequently moved for postponements of hearings on October 9, 1998, and November 14, 1998, citing the unavailability of the PNP examination results. During the December 10, 1998 hearing, Metrobank’s counsel failed to appear, leading UOB to move for dismissal, which the Arbitration Committee granted.
On March 9, 1999, Metrobank filed a Motion for Reconsideration of the dismissal, attaching a medical certificate for its counsel’s influenza and a PNP Crime Laboratory Report confirming the check was altered. UOB opposed, arguing Metrobank was not serious in prosecuting the case. The Arbitration Committee denied the motion on February 28, 2000. Metrobank filed a Second Motion for Reconsideration on March 20, 2000. On April 14, 2000, the PCHC Board of Directors issued Resolution No. 08-2000 denying the second motion. Metrobank moved for reconsideration of this resolution but received advice from the PCHC Executive Secretary on May 5, 2000, that the proper remedy under Section 13 of the PCHC Rules was to file a notice of appeal with PCHC and a petition for review with the Regional Trial Court (RTC) within 15 days.
Accordingly, on May 9, 2000, Metrobank filed a Petition for Review (Civil Case No. 00-595) with the RTC of Makati City. On July 25, 2003, the trial court dismissed the petition, ruling it had no jurisdiction as the petition was filed out of time, and that the Arbitration Committee correctly dismissed the case for failure to prosecute. Metrobank appealed to the Court of Appeals, which affirmed the trial court’s dismissal in its November 30, 2004 Decision, but on different grounds: it held the petition was filed on time per PCHC Rules but was correctly dismissed due to Metrobank’s lack of interest to prosecute and violation of the 24-hour clearing house rule. Metrobank then filed a petition for review on certiorari before the Supreme Court.

ISSUE

Whether the Regional Trial Court had jurisdiction over Metrobank’s Petition for Review of the PCHC arbitral award.

RULING

The Supreme Court DENIED the petition. The Court held that the trial court properly dismissed Civil Case No. 00-595 for lack of jurisdiction over the subject matter. Citing Insular Savings Bank v. Far East Bank and Trust Company, the Court ruled that the PCHC Rules, being a product of an agreement among member banks and not by law, cannot confer jurisdiction on the RTC to review arbitral awards. The proper judicial remedies available to Metrobank after the denial of its motion for reconsideration by the Arbitration Committee were: (1) to file a motion to vacate the arbitral award with the RTC under Section 24 of the Arbitration Law; (2) to file a petition for review with the Court of Appeals under Rule 43 of the Rules of Court; or (3) to file a petition for certiorari under Rule 65 of the Rules of Court with the Court of Appeals. Metrobank erroneously filed a petition for review with the RTC based on the PCHC Executive Secretary’s advice, which was a fatal procedural error. Consequently, the RTC lacked jurisdiction, and the dismissal was correct on this ground. The Court found no compelling reason to resolve the other issues raised in the petition.