JURISDICTION cases 3rd set

G.R. No. 143951 October 25, 2005

Norma Mangaliag and Narciso Solano, Petitioners,

vs.
Hon. Edelwina Catubig-Pastoral, Judge of the Regional Trial Court, 1st Judicial Region, San
Carlos City, (Pangasinan), Branch 56 and Apolinario Serquina, Jr., Respondents.

DECISION

AUSTRIA-MARTINEZ, J.:

Before us is a petition for certiorari, with a prayer for the issuance of a temporary restraining order, to set
aside the Order dated April 17, 2000 of the Regional Trial Court (RTC), Branch 56, San Carlos City in
Civil Case No. SCC-2240, which denied petitioners’ motion to dismiss; and the Order dated June 13,
2000, which denied petitioners’ motion for reconsideration.

The factual background of the case is as follows:

On May 10, 1999, private respondent Apolinario Serquina, Jr. filed before the RTC a complaint for
damages against petitioners Norma Mangaliag and Narciso Solano. The complaint alleges that: on
January 21, 1999, from 9:00 to 10:00 a.m., private respondent, together with Marco de Leon, Abner
Mandapat and Manuel de Guzman, was on board a tricycle driven by Jayson Laforte; while in Pagal, San
Carlos City, a dump truck owned by petitioner Mangaliag and driven by her employee, petitioner Solano,
coming from the opposite direction, tried to overtake and bypass a tricycle in front of it and thereby
encroached the left lane and sideswiped the tricycle ridden by private respondent; due to the gross
negligence, carelessness and imprudence of petitioner Solano in driving the truck, private respondent and
his co-passengers sustained serious injuries and permanent deformities; petitioner Mangaliag failed to
exercise due diligence required by law in the selection and supervision of her employee; private
respondent was hospitalized and spent ₱71,392.00 as medical expenses; private respondent sustained a
permanent facial deformity due to a fractured nose and suffers from severe depression as a result
thereof, for which he should be compensated in the amount of ₱500,000.00 by way of moral damages; as
a further result of his hospitalization, private respondent lost income of ₱25,000.00; private respondent
engaged the services of counsel on a contingent basis equal to 25% of the total award. 1

On July 21, 1999, petitioners filed their answer with counterclaim denying that private respondent has a
cause of action against them. They attributed fault or negligence in the vehicular accident on the tricycle
driver, Jayson Laforte, who was allegedly driving without license.2

Following pre-trial conference, trial on the merits ensued. When private respondent rested his case,
petitioner Solano testified in his defense.

Subsequently, on March 8, 2000, petitioners, assisted by a new counsel, filed a motion to dismiss on the
ground of lack of jurisdiction over the subject matter of the claim, alleging that the Municipal Trial Court
(MTC) has jurisdiction over the case since the principal amount prayed for, in the amount of ₱71,392.00,
falls within its jurisdiction.3 Private respondent opposed petitioners’ motion to dismiss.4 On March 24,
2000, petitioners filed a supplement in support of their motion to dismiss. 5

On April 17, 2000, the respondent RTC Judge, Edelwina Catubig-Pastoral, issued the first assailed Order
denying petitioners’ motion to dismiss,6 relying upon the mandate of Administrative Circular No. 09-94,
paragraph 2 of which reads:

2. The exclusion of the term "damages of whatever kind in determining the jurisdictional amount under
Section 19 (8) and Section 33 (1) of B.P. Blg. 129, as amended by R.A. No. 7691, applied to cases where
the damages are merely incidental to or a consequence of the main cause of action. However, in cases
where the claim for damages is the main cause of action, or one of the causes of action, the amount of
such claim shall be considered in determining the jurisdiction of the court.

The respondent RTC Judge also cited the 1999 case of Ong vs. Court of Appeals,7 where an action for
damages due to a vehicular accident, with prayer for actual damages of ₱10,000.00 and moral damages
of ₱1,000,000.00, was tried in a RTC.

On May 19, 2000, petitioners filed a motion for reconsideration8 but it was denied by the respondent RTC
Judge in her second assailed Order, dated June 13, 2000.9

Hence, the present petition for certiorari, with prayer for the issuance of a temporary restraining order.10
JURISDICTION cases 3rd set

On August 9, 2000, the Court resolved to issue the temporary restraining order prayed for by petitioners.
Consequently, the respondent RTC Judge desisted from hearing further Civil Case No. SCC-2240.11

Petitioners propound this issue for consideration: In an action for recovery of damages, does the amount
of actual damages prayed for in the complaint provide the sole test for determining the court’s jurisdiction,
or is the total amount of all the damages claimed, regardless of kind and nature, such as moral,
exemplary, nominal damages, and attorney’s fees, etc., to be computed collectively with the actual
damages to determine what court – whether the MTC or the RTC – has jurisdiction over the action?

Petitioners maintain that the court’s jurisdiction should be based exclusively on the amount of actual
damages, excluding therefrom the amounts claimed as moral, exemplary, nominal damages and
attorney’s fee, etc. They submit that the specification in Administrative Circular No. 09-94 that "in cases
where the claim for damages is the main cause of action. . . the amount of such claim shall be considered
in determining the jurisdiction of the court"signifies that the court’s jurisdiction must be tested solely by the
amount of that damage which is principally and primarily demanded, and not the totality of all the
damages sought to be recovered.

Petitioners insist that private respondent’s claim for actual damages in the amount of ₱71,392.00 is the
principal and primary demand, the same being the direct result of the alleged negligence of petitioners,
while the moral damages for ₱500,000.00 and attorney’s fee, being the consequent effects thereof, may
prosper only upon a prior finding by the court of the existence of petitioners’ negligence that caused the
actual damages. Considering that the amount of actual damages claimed by private respondent in Civil
Case No. SCC-2240 does not exceed ₱200,000.00, which was then the jurisdictional amount of the MTC,
the jurisdiction over the case clearly pertains to the MTC, and not to the RTC. Therefore, the RTC should
have dismissed the case for lack of jurisdiction. Petitioners cite as relevant the case of Movers-Baseco
Integrated Port Services, Inc. vs. Cyborg Leasing Corporation12 wherein the Court, in disposing of the
jurisdictional issue, limited its consideration only to the actual or compensatory damages.

Furthermore, while admitting that the defense of lack of jurisdiction was only raised during the trial,
petitioners nevertheless contend that jurisdiction may be raised anytime, even after judgment, but before
it is barred by laches or estoppel. They submit that they seasonably presented the objection to the RTC’s
lack of jurisdiction, i.e., during the trial stage where no decision had as yet been rendered, must less one
unfavorable to them.

At any rate, they argue that when the jurisdictional flaw is evident from the record of the case, the court
may, even without the urgings of the parties, take judicial notice of such fact, and thereupon dismiss the
case motu proprio. Thus, even if lack of jurisdiction was not initially raised in a motion to dismiss or in the
answer, no waiver may be imputed to them.

Private respondent, on the other hand, submits that in an action for recovery of damages arising from a
tortious act, the claim of moral damages is not merely an incidental or consequential claim but must be
considered in the amount of demand which will determine the court’s jurisdiction. He argues that the
position taken by petitioners is a misreading of paragraph 2 of Administrative Circular No. 09-94. The
clear and explicit language of said circular leaves no room for doubt; hence, needs no interpretation.

He further submits that petitioners’ reliance on Movers-Baseco Integrated Port Services, Inc. is misplaced
since that case is for recovery of the value of vehicle and unpaid rentals on the lease of the same. He
contends that Section 18, paragraph 8 of Batas Pambansa Blg. 129, as amended by Republic Act No.
7691, upon which petitioners anchor their stand, refers to all the demands involving collection of sums of
money based on obligations arising from contract, express or implied, where the claim for damages is just
incidental thereto and it does not apply to actions for damages based on obligations arising from quasi-
delict where the claim for damages of whatever kind is the main action.

Private respondent also contends that, being incapable of pecuniary computation, the amount of moral
damages that he may be awarded depends on the sound discretion of the trial court, not restrained by the
limitation of the jurisdictional amount. Should the Court follow petitioners’ line of reasoning, private
respondent argues that it will result in an absurd situation where he can only be awarded moral damages
of not more than ₱200,000.00 although he deserves more than this amount, taking into consideration his
physical suffering, as well as social and financial standing, simply because his claim for actual damages
does not exceed ₱200,000.00 which amount falls under the jurisdiction of the MTC.

Lastly, he asserts that it is too late in the day for petitioners to question the jurisdiction of the RTC since
they are estopped from invoking this ground. He contends that after actively taking part in the trial
proceedings and presenting a witness to seek exoneration, it would be unfair and legally improper for
petitioners to seek the dismissal of the case.
JURISDICTION cases 3rd set

At the outset, it is necessary to stress that generally a direct recourse to this Court is highly improper, for
it violates the established policy of strict observance of the judicial hierarchy of courts. Although this
Court, the RTCs and the Court of Appeals (CA) have concurrent jurisdiction to issue writs of certiorari,
prohibition, mandamus, quo warranto, habeas corpus and injunction, such concurrence does not give the
petitioner unrestricted freedom of choice of court forum. This Court is a court of last resort, and must so
remain if it is to satisfactorily perform the functions assigned to it by the Constitution and immemorial
tradition.13

Thus, this Court, as a rule, will not entertain direct resort to it unless the redress desired cannot be
obtained in the appropriate courts, and exceptional and compelling circumstances, such as cases of
national interest and of serious implications, justify the availment of the extraordinary remedy of writ
of certiorari, calling for the exercise of its primary jurisdiction.14 Such exceptional and compelling
circumstances were present in the following cases: (a) Chavez vs. Romulo15 on the citizens’ right to bear
arms; (b) Government of the United States of America vs. Purganan16 on bail in extradition proceedings;
(c) Commission on Elections vs. Quijano-Padilla17 on a government contract on the modernization and
computerization of the voters’ registration list; (d) Buklod ng Kawaning EIIB vs. Zamora[18] on the status
and existence of a public office; and (e) Fortich vs. Corona19 on the so-called "Win-Win Resolution" of the
Office of the President which modified the approval of the conversion to agro-industrial area of a 144-
hectare land.

Be that as it may, the judicial hierarchy of courts is not an iron-clad rule. It generally applies to cases
involving warring factual allegations. For this reason, litigants are required to repair to the trial courts at
the first instance to determine the truth or falsity of these contending allegations on the basis of the
evidence of the parties. Cases which depend on disputed facts for decision cannot be brought
immediately before appellate courts as they are not triers of facts. 20 Therefore, a strict application of the
rule of hierarchy of courts is not necessary when the cases brought before the appellate courts do not
involve factual but legal questions.

In the present case, petitioners submit a pure question of law involving the interpretation and application
of paragraph 2 of Administrative Circular No. 09-94. This legal question and in order to avoid further delay
are compelling enough reasons to allow petitioners’ invocation of this Court’s jurisdiction in the first
instance.

Before resolving this issue, the Court shall deal first on the question of estoppel posed by private
respondent. Private respondent argues that the defense of lack of jurisdiction may be waived by estoppel
through active participation in the trial. Such, however, is not the general rule but an exception, best
characterized by the peculiar circumstances in Tijam vs. Sibonghanoy.21 In Sibonghanoy, the party
invoking lack of jurisdiction did so only after fifteen years and at a stage when the proceedings had
already been elevated to the CA. Sibonghanoy is an exceptional case because of the presence of laches,
which was defined therein as failure or neglect for an unreasonable and unexplained length of time to do
that which, by exercising due diligence, could or should have been done earlier; it is the negligence or
omission to assert a right within a reasonable time, warranting a presumption that the party entitled to
assert has abandoned it or declined to assert it.22

As enunciated in Calimlim vs. Ramirez,23 this Court held:

A rule that had been settled by unquestioned acceptance and upheld in decisions so numerous to cite is
that the jurisdiction of a court over the subject matter of the action is a matter of law and may not be
conferred by consent or agreement of the parties. The lack of jurisdiction of a court may be raised at any
stage of the proceedings, even on appeal. This doctrine has been qualified by recent pronouncements
which stemmed principally from the ruling in the cited case of Sibonghanoy. It is to be regretted, however,
that the holding in said case had been applied to situations which were obviously not contemplated
therein. The exceptional circumstances involved in Sibonghanoy which justified the departure from the
accepted concept of non-waivability of objection to jurisdiction has been ignored and, instead a blanket
doctrine had been repeatedly upheld that rendered the supposed ruling in Sibonghanoy not as the
exception, but rather the general rule, virtually overthrowing altogether the time honored principle that the
issue of jurisdiction is not lost by waiver or by estoppel.

...

It is neither fair nor legal to bind a party by the result of a suit or proceeding which was taken cognizance
of in a court which lacks jurisdiction over the same irrespective of the attendant circumstances. The
equitable defense of estoppel requires knowledge or consciousness of the facts upon which it is based.
The same thing is true with estoppel by conduct which may be asserted only when it is shown, among
others, that the representation must have been made with knowledge of the facts and that the party to
whom it was made is ignorant of the truth of the matter (De Castro vs. Gineta, 27 SCRA 623). The filing of
an action or suit in a court that does not possess jurisdiction to entertain the same may not be presumed
JURISDICTION cases 3rd set

to be deliberate and intended to secure a ruling which could later be annulled if not favorable to the party
who filed such suit or proceeding. Instituting such an action is not a one-sided affair. It can just as well be
prejudicial to the one who file the action or suit in the event that he obtains a favorable judgment therein
which could also be attacked for having been rendered without jurisdiction. The determination of the
correct jurisdiction of a court is not a simple matter. It can raise highly debatable issues of such
importance that the highest tribunal of the land is given the exclusive appellate jurisdiction to entertain the
same. The point simply is that when a party commits error in filing his suit or proceeding in a court that
lacks jurisdiction to take cognizance of the same, such act may not at once be deemed sufficient basis of
estoppel. It could have been the result of an honest mistake or of divergent interpretations of doubtful
legal provisions. If any fault is to be imputed to a party taking such course of action, part of the blame
should be placed on the court which shall entertain the suit, thereby lulling the parties into believing that
they pursued their remedies in the correct forum. Under the rules, it is the duty of the court to dismiss an
action "whenever it appears that court has no jurisdiction over the subject matter." (Section 2, Rule 9,
Rules of Court) Should the Court render a judgment without jurisdiction, such judgment may be
impeached or annulled for lack of jurisdiction (Sec. 30, Rule 132, Ibid), within ten (10) years from the
finality of the same (Art. 1144, par. 3, Civil Code).24

In the present case, no judgment has yet been rendered by the RTC.25 As a matter of fact, as soon as the
petitioners discovered the alleged jurisdictional defect, they did not fail or neglect to file the appropriate
motion to dismiss. Hence, finding the pivotal element of laches to be absent, the Sibonghanoy doctrine
does not control the present controversy. Instead, the general rule that the question of jurisdiction of a
court may be raised at any stage of the proceedings must apply. Therefore, petitioners are not estopped
from questioning the jurisdiction of the RTC.

In any event, the petition for certiorari is bereft of merit.

Section 1 of Republic Act (R.A.) No. 7691, which took effect on April 15, 1994, provides inter alia that
where the amount of the demand in civil cases exceeds ₱100,000.00,26 exclusive of interest, damages of
whatever kind, attorney’s fees, litigation expenses, and costs, the exclusive jurisdiction thereof is lodged
with in the RTC. Under Section 3 of the same law, where the amount of the demand in the complaint
does not exceed ₱100,000.00, exclusive of interest, damages of whatever kind, attorney’s fees, litigation
expenses, and costs, the exclusive jurisdiction over the same is vested in the Metropolitan Trial Court,
MTC and Municipal Circuit Trial Court. The jurisdictional amount was increased to
₱200,000.00,27 effective March 20, 1999, pursuant to Section 5 28 of R.A. No. 7691 and Administrative
Circular No. 21-99.

In Administrative Circular No. 09-94 dated March 14, 1994, the Court specified the guidelines in the
implementation of R.A. No. 7691. Paragraph 2 of the Circular provides:

2. The exclusion of the term "damages of whatever kind in determining the jurisdictional amount under
Section 19 (8) and Section 33 (1) of B.P. Blg. 129, as amended by R.A. No. 7691, applied to cases where
the damages are merely incidental to or a consequence of the main cause of action. However, in cases
where the claim for damages is the main cause of action, or one of the causes of action, the
amount of such claim shall be considered in determining the jurisdiction of the court. (Emphasis
supplied)

The well-entrenched principle is that the jurisdiction of the court over the subject matter of the action is
determined by the material allegations of the complaint and the law, irrespective of whether or not the
plaintiff is entitled to recover all or some of the claims or reliefs sought therein. 29 In the present case, the
allegations in the complaint plainly show that private respondent seeks to recover not only his medical
expenses, lost income but also damages for physical suffering and mental anguish due to permanent
facial deformity from injuries sustained in the vehicular accident. Viewed as an action for quasi-delict, the
present case falls squarely within the purview of Article 2219 (2), 30 which provides for the payment of
moral damages in cases of quasi-delict causing physical injuries.

Private respondent’s claim for moral damages of ₱500,000.00 cannot be considered as merely incidental
to or a consequence of the claim for actual damages. It is a separate and distinct cause of action or an
independent actionable tort. It springs from the right of a person to the physical integrity of his or her
body, and if that integrity is violated, damages are due and assessable.31 Hence, the demand for moral
damages must be considered as a separate cause of action, independent of the claim for actual damages
and must be included in determining the jurisdictional amount, in clear consonance with paragraph 2 of
Administrative Circular No. 09-94.

If the rule were otherwise, i.e., the court’s jurisdiction in a case of quasi-delict causing physical injuries
would only be based on the claim for actual damages and the complaint is filed in the MTC, it can only
award moral damages in an amount within its jurisdictional limitations, a situation not intended by the
framers of the law.
JURISDICTION cases 3rd set

It must be remembered that moral damages, though incapable of pecuniary estimation, are designed to
compensate and alleviate in some way the physical suffering, mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury unjustly
caused a person.32 Moral damages are awarded to enable the injured party to obtain means, diversions
or amusements that will serve to alleviate the moral suffering he/she has undergone, by reason of the
defendant’s culpable action. Its award is aimed at restoration, as much as possible, of the spiritual status
quo ante; thus, it must be proportionate to the suffering inflicted. Since each case must be governed by its
own peculiar circumstances, there is no hard and fast rule in determining the proper amount. 33

The petitioners’ reliance in the case of Movers-Baseco Integrated Port Services, Inc. vs. Cyborg Leasing
Corporation34 is misplaced. The claim for damages therein was based on a breach of a contract of lease,
not a quasi-delict causing physical injuries, as in this case. Besides, there was no claim therein for moral
damages. Furthermore, moral damages are generally not recoverable in damage actions predicated on a
breach of contract in view of the provisions of Article 222035 of the Civil Code.

In view of the foregoing, the Court is convinced that the respondent RTC Judge committed no grave
abuse of discretion in issuing the assailed Orders dated April 17, 2000 and June 13, 2000.

WHEREFORE, the instant petition for certiorari is DISMISSED for lack of merit. The temporary restraining
order issued by this Court on August 9, 2000 is LIFTED.

The Regional Trial Court, Branch 56, San Carlos City is DIRECTED to continue with the trial proceedings
in Civil Case No. SCC-2240 and resolve the case with dispatch.

Costs against petitioners.

SO ORDERED.
JURISDICTION cases 3rd set

G.R. No. 103200 August 31, 1994

LA NAVAL DRUG CORPORATION, petitioner,

vs.
THE HONORABLE COURT OF APPEALS and WILSON C. YAO, respondents.

Jerome T. Paras for petitioner.

Quasha, Asperilla, Ancheta, Peña & Nolasco for private respondent.

VITUG, J.:

In an effort to declog the courts of an increasing volume of work load and, most importantly, in order to
accord contending parties with expenditious alternatives for settling disputes, the law authorities, indeed
encourages, out of court settlements or adjudications. Compromises and arbitration are widely known and
used as such acceptable methods of resolving adversarial claims.

Arbitrations, in particular, is governed by a special law, Republic Act 876, suppletory to which are laws
and rules of general application. This case before us concerns the jurisdiction of courts, in relation to the
provisions of Section 6 of Republic Act No. 876, and, in that respect, the applicability of the doctrine of
estoppel. The law (R.A. 876), specifically Section 6 thereof, provides:

Sec. 6. Hearing by court. — A party aggrieved by the failure, neglect or refusal of another
to perform under an agreement in writing providing for arbitration may petition the court
for an order directing that such arbitration proceed in the manner provided for in such
agreement. Five days notice in writing of the hearing of such application shall be served
either personally or by registered mail upon the party in default. The court shall hear the
parties, and upon being satisfied that the making of the agreement or such failure to
comply therewith is not in issue, shall make an order directing the parties to proceed to
arbitration in accordance with the terms of the agreement. If the making of the agreement
or default be in issue the court shall proceed to summarily hear such issue. If the finding
be that no agreement in writing providing for arbitration was made, or that there is no
default in the proceeding thereunder, the proceeding shall be dismissed. If the finding be
that a written provision for arbitration was made and there is a default in proceeding
thereunder, an order shall be made summarily directing the parties to proceed with the
arbitration in accordance with the terms thereof.

The court shall decide all motions, petitions or application filed under the provisions of
this Act, within ten days after such motions, petitions, or applications have been heard by
it.

In chronology, the events that have led to the case at bench are detailed in the appealed decision of
respondent appellate court, which we here reproduce in toto.

Original action for Certiorari and Prohibition for Annulment of the Orders, dated April 26,
1990 and June 22, 1990, respectively, of Branch LXI, Regional Trial Court, Angeles City,
in Special Case No. 6024 for Enforcement of ARBITRATION Agreement with Damages.
Petitioner assails that portion of subject Order of April 26, 1990, stating as follows:

(1) Petitioner's claim for damages predicated on alleged tortuous acts of

respondents La Naval Drug corporation such as their alleged
interference and dilatory tactics, etc. in the implementation of the
Arbitration Agreement in the Contract of Lease, thereby compelling
among others the petitioner to go to Court for redress; and respondent
La Naval Drug Corporation's counterclaim for damages may be
entertained by this Court in a hearing — not summary — for the purpose,
under the Rules of Court.

(2) A preliminary hearing of the special and affirmative defense to show

that Petitioner has not cause of action against respondent's claim for
damages is denied; a resolution on this issue is deferred after the trial of
the case on the merits.
JURISDICTION cases 3rd set

And challenges the Order of June 22, 1990 denying its motion for reconsideration of the
said earlier Order.

From the petition below of respondent Yao, it appears that he is the present owner of a
commercial building a portion of which is leased to petitioner under a contract of lease
executed on December 23, 1993 with the former owner thereof, La Proveedora, Inc.,
which contract expired on April 30, 1989. However, petitioner exercised its option to lease
the same building for another five years. But petitioner and respondent Yao disagreed on
the rental rate, and to resolve the controversy, the latter, thru written notices to the
former, expressed his intention to submit their disagreement to arbitration, in accordance
with Republic Act 876, otherwise known as the Arbitration Law, and paragraph 7 of their
lease contract, providing that:

7. . . . Should the parties fail to agree on the rate of rentals, the same
shall be submitted to a group of Arbitrators composed of three (3)
members, one to be appointed by LESSOR, another by LESSEE and the
third one to be agreed upon by the two arbitrators previously chosen and
the parties hereto shall submit to the decision of the arbitrators.

Thus, on May 6, 1989, respondent Yao appointed Domingo Alamarez, Jr. as his
arbitrator, while on June 5, 1989, petitioner chose Atty. Casiano Sabile as its arbitrator.
The confirmation of the appointment of Aurelio Tupang, as third arbitrator, was held in
abeyance because petitioner instructed Atty. Sabile to defer the same until its Board of
Directors could convene and approve Tupang's appointment. Respondent Yao theorizes
that this was petitioner's design to delay the arbitration proceedings, in violation of the
Arbitration Law, and the governing stipulation of their contract of lease.

On the basis of the aforesaid allegations, respondent Yao prayed that after summary
hearing pursuant to Section 6 of the Arbitration Law, Atty. Casiano Sabile and Domingo
Alamarez be directed to proceed with the arbitration in accordance with Section 7 of
subject Contract of Lease and the applicable provisions of the Arbitration law, by
appointing and confirming the appointment of the Third Arbitrator; and that the Board of
Three Arbitrators be ordered to immediately convene and resolve the controversy before
it, pursuant to Section 12 and the succeeding sections of the Arbitration Law. (Annex "A,"
Petition.)

In its Answer with Counterclaim (Annex "C," Petition), petitioner here specifically denied
the averments of the petition below; theorizing that such petition is premature since
respondent Yao has not yet formally required arbitrators Alamarez and Sabile to agree on
the third arbitrator, within ten (10) days from notice, and that the delay in the arbitration
was due to respondent Yao's failure to perform what is incumbent upon him, of notifying
and thereafter, requiring both arbitrators to appoint the third member of the Board of
Arbitrators. According to petitioner, it actually gave arbitrators Sabile and Alamarez a free
hand in choosing the third arbitrator; and, therefore, respondent Yao has no cause of
action against it (petitioner). By way of Counterclaim, petitioner alleged that it suffered
actual damages of P100,000.00; and incurred attorney's fees of P50,000.00, plus
P500.00 for every court appearance of its counsel.

On October 20, 1989, respondent Yao filed an amended petition for "Enforcement of
Arbitration Agreement with Damages;" praying that petitioner be ordered to pay interest
on the unpaid rents, at the prevailing rate of interest in commercial banks, and exemplary
damages of at least P250,000.00.

On October 24, 1989, despite petitioner's opposition to the motion to admit the amended
petition, the respondent court admitted the same.

On October 31, 1989, petitioner answered the amended petition; contending, among
others, that the amended petition should be dismissed on the ground of non-payment of
the requisite filing fees therefor; and it being in the nature of an ordinary civil action, a full
blown and regular trial, is necessary; so that respondent Yao's proposition for a summary
hearing of the arbitration issue and separate trial for his claim for damages is
procedurally untenable and implausible.

Invoking Section 5, Rule 16 of the Rules of Court, petitioner presented a "Motion to Set
Case for Preliminary Hearing" of its special and affirmative defenses, which are grounds
fro a motion to dismiss.
JURISDICTION cases 3rd set

In its Order of November 14, 1989, the respondent court announced that the two
arbitrators chose Mrs. Eloisa R. Narciso as the third arbitrator. And on November 21,
1989, it ordered the parties to submit their position papers on the issue as to whether or
not respondent Yao's claim for damages may be litigated upon in the summary
proceeding for enforcement of arbitration agreement. It likewise informed the parties that
petitioner's Motion to Set Case for Preliminary Hearing" of Special and Affirmative
Defenses would be resolved together with the question of damages.

On April 26, 1990, the aforequoted assailed Order issued. In moving for reconsideration
of the said Order, petitioner argued that in Special Case No. 6024, the respondent court
sits as a special court exercising limited jurisdiction and is not competent to act on
respondent Yao's claim for damages, which poses an issue litigable in an ordinary civil
action. But the respondent court was not persuaded by petitioner's submission. On June
22, 1990, it denied the motion for reconsideration. (Rollo, pp. 89-93).

While the appellate court has agreed with petitioner that, under Section 6 of Republic Act No. 876, a
court, acting within the limits of its special jurisdiction, may in this case solely determine the issue of
whether the litigants should proceed or not to arbitration, it, however, considered petitioner in estoppel
from questioning the competence of the court to additionally hear and decide in the summary proceedings
private respondent's claim for damages, it (petitioner) having itself filed similarly its own counterclaim with
the court a quo.

It is hardly disputable that when a court is called upon to exercise limited and special jurisdiction, that
court cannot stray to matters outside the area of its declared authority or beyond what has been expressly
invested by law (Elumbaring vs. Elumbaring, 12 Phil. 384, 387), particularly, such as in this instance,
where the proceedings are summary in nature.

Prefatorily, recalling the distinctions, pertinent to the case, between the court's lack of jurisdiction over
the person of the defendant, on the one hand, and its lack of jurisdiction over the subject matter or
the nature of the action, upon the other hand, should be useful.

The lack of jurisdiction over the person of the defendant may be waived either expressly or impliedly.
When a defendant voluntarily appears, he is deemed to have submitted himself to the jurisdiction of the
court. If he so wishes not to waive this defense, he must do so seasonably by motion for the purpose of
objecting to the jurisdiction of the court; otherwise, he shall be deemed to have submitted himself to that
jurisdiction. The decisions promulgated heretofore by this Court would likewise seemingly apply estoppel
to bar the defendant from pursuing that defense by alleging in his answer any other issue for dismissing
the action.

A citation of a few of our decisions might be apropos.

In Wang Laboratories, Inc., vs. Mendoza (156 SCRA 44), this Court has ruled that if the defendant,
besides setting up in a motion to dismiss his objection to the jurisdiction of the court, alleges at the same
time any other ground for dismissing the action, he is deemed to have submitted himself to the jurisdiction
of the court. In the process, it has equated the matter to a situation where, such as in Immaculata vs.
Judge Navarro, et al. (146 SCRA 5), the defendant invokes an affirmative relief against his opponent.

In De Midgely vs. Judge Ferandos (64 SCRA 23, 31), the Court elaborated thusly:

We are of the opinion that the lower court has acquired jurisdiction over the person of
Mrs. Midgely by reason of her voluntary appearance. The reservation in her motion to
dismiss that she was making a special appearance to contest the court's jurisdiction over
her person may be disregarded.

It may be disregarded because it was nullified by the fact that in her motion to dismiss
she relied not only on the ground of lack of jurisdiction over her person but also on the
ground that there was no showing that earnest efforts were exerted to compromise the
case and because she prayed "for such other relief as" may be deemed "appropriate and
proper."

xxx xxx xxx

When the appearance is by motion for the purpose of objecting to the jurisdiction of the
court over the person, it must be for the sole and separate purpose of objecting to the
jurisdiction of the court. If his motion is for any other purpose than to object to the
jurisdiction of the court over his person, he thereby submits himself to the jurisdiction of
JURISDICTION cases 3rd set

the court. A special appearance by motion made for the purpose of objecting to the
jurisdiction of the court over the person will be held to be a general appearance, if the
party in said motion should, for example, ask for a dismissal of the action upon the further
ground that the court had no jurisdiction over the subject matter. (Syllabus, Flores vs.
Zurbito, supra, at page 751. That rule was followed in Ocampo vs. Mina and Arejola, 41
Phil. 308).

The justification for the rule was expressed in Republic vs. Ker and Companry, Ltd. (18 SCRA 207, 213-
214), in this wise:

We observed that the motion to dismiss filed on April 14, 1962, aside from disputing the
lower court's jurisdiction over defendant's person, prayed for dismissal of the complaint
on the ground that plaintiff's cause of action had prescribed. By interposing such second
ground in its motion to dismiss, Ker & Co., Ltd. availed of an affirmative defense on the
basis of which it prayed the court to resolve controversy in its favor. For the court to
validly decide the said plea of defendant Ker & Co., Ltd., it necessarily had to acquire
jurisdiction upon the latter's person, who, being the proponent of the affirmative defense,
should be deemed to have abandoned its special appearance and voluntarily submitted
itself to the jurisdiction of the court.

Voluntary appearance cures defects of summons, if any, Such defect, if any, was further
cured when defendant filed its answer to the complaint. A defendant can not be permitted
to speculate upon the judgment of the court by objecting to the court's jurisdiction over its
person if the judgment is adverse to it, and acceding to jurisdiction over its person if and
when the judgment sustains its defenses.

The doctrine of estoppel is predicated on, and has its origin in, equity which, broadly defined, is justice
according to natural law and right. It is a principle intended to avoid a clear case of injustice. The term is
hardly distinguishable from a waiver of right. Estoppel, like its said counterpart, must be unequivocal and
intentional for, when misapplied, it can easily become a most convenient and effective means of injustice.
Estoppel is not understood to be a principle that, as a rule, should prevalently apply but, such as it
concededly is, as a mere exception from the standard legal norms of general application that can be
invoked only in highly exceptional and justifiable cases.

Tested by the above criteria, the Court sees it propitious to re-examine specifically the question of
whether or not the submission of other issues in a motion to dismiss, or of an affirmative defense (as
distinguished from an affirmative relief) in an answer, would necessarily foreclose, and have the effect of
a waiver of, the right of a defendant to set up the court's lack of jurisdiction over the person of the
defendant.

Not inevitably.

Section 1, Rule 16, of the Rules of Court, provides that a motion to dismiss may be made on the following
grounds:

(a) That the court has no jurisdiction over the person of the defendant or over the subject
of the action or suit;

(b) That the court has no jurisdiction over the nature of the action or suit;

(c) The venue is improperly laid;

(d) That the plaintiff has no legal capacity to sue;

(e) That there is another action pending between the same parties for the same cause;

(f) That the cause of action is barred by a prior judgment or by statute of limitations;

(g) That the complaint states no cause of action;

(h) That the claim or demand set forth in the plaintiff's pleading has been paid, waived,
abandoned, or otherwise extinguished;

( i ) That the claim on which the action or suit is founded is unenforceable under the
provisions of the statute of frauds;
JURISDICTION cases 3rd set

( j ) That the suit is between members of the same family and no earnest efforts towards
a compromise have been made.

Any ground for dismissal in a motion to dismiss, except improper venue, may, as further set forth in
Section 5 of the same rule, be pleaded as an affirmative defense and a preliminary hearing may be had
thereon as if a motion to dismiss had been filed. An answer itself contains the negative, as well as
affirmative, defenses upon which the defendant may rely (Section 4, Rule 6, Rules of Court). A negative
defense denies the material facts averred in the complaint essential to establish the plaintiff's cause of
action, while an affirmative defense in an allegation of a new matter which, while admitting the material
allegations of the complaint, would, nevertheless, prevent or bar recovery by the plaintiff. Inclusive of
these defenses are those mentioned in Rule 16 of the Rules of Court which would permit the filing of a
motion to dismiss.

In the same manner that the plaintiff may assert two or more causes of action in a court suit, a defendant
is likewise expressly allowed, under Section 2, Rule 8, of the Rules of Court, to put up his own defenses
alternatively or even hypothetically. Indeed, under Section 2, Rule 9, of the Rules of Court, defenses and
objections not pleaded either in a motion to dismiss or in an answer, except for the failure to state a cause
of action, are deemed waived. We take this to mean that a defendant may, in fact, feel enjoined to set up,
along with his objection to the court's jurisdiction over his person, all other possible defenses. It thus
appears that it is not the invocation of any of such defenses, but the failure to so raise them, that can
result in waiver or estoppel. By defenses, of course, we refer to the grounds provided for in Rule 16 of the
Rules of Court that must be asserted in a motion to dismiss or by way of affirmative defenses in an
answer.

Mindful of the foregoing, in Signetics Corporation vs. Court of Appeals and Freuhauf Electronics Phils.,
Inc. (225 SCRA 737, 738), we lately ruled:

This is not to say, however, that the petitioner's right to question the jurisdiction of the
court over its person is now to be deemed a foreclosed matter. If it is true, as Signetics
claims, that its only involvement in the Philippines was through a passive investment in
Sigfil, which it even later disposed of, and that TEAM Pacific is not its agent, then it
cannot really be said to be doing business in the Philippines. It is a defense, however,
that requires the contravention of the allegations of the complaint, as well as full
ventilation, in effect, of the main merits of the case, which should not thus be within the
province of a mere motion to dismiss. So, also, the issue posed by the petitioner as to
whether a foreign corporation which has done business in the country, but which has
ceased to do business at the time of the filing of a complaint, can still be made to answer
for a cause of action which accrued while it was doing business, is another matter that
would yet have to await the reception and admission of evidence. Since these points
have seasonably been raised by the petitioner, there should be no real cause for what
may understandably be its apprehension, i.e., that by its participation during the trial on
the merits, it may, absent an invocation of separate or independent reliefs of its own, be
considered to have voluntarily submitted itself to the court's jurisdiction.

Lack of jurisdiction over the subject matter of the suit is yet another matter. Whenever it appears that the
court has no jurisdiction over the subject matter, the action shall be dismissed (Section 2, Rule 9, Rules of
Court). This defense may be interposed at any time, during appeal (Roxas vs. Rafferty, 37 Phil. 957) or
even after final judgment (Cruzcosa vs. Judge Concepcion, et al., 101 Phil. 146). Such is understandable,
as this kind of jurisdiction is conferred by law and not within the courts, let alone the parties, to
themselves determine or conveniently set aside. In People vs. Casiano (111 Phil. 73 93-94), this Court,
on the issue of estoppel, held:

The operation of the principle of estoppel on the question of jurisdiction seemingly

depends upon whether the lower court actually had jurisdiction or not. If it had no
jurisdiction, but the case was tried and decided upon the theory that it had jurisdiction, the
parties are not barred, on appeal, from assailing such jurisdiction, for the same "must
exist as a matter of law, and may not be conferred by consent of the parties or by
estoppel" (5 C.J.S., 861-863). However, if the lower court had jurisdiction, and the case
was heard and decided upon a given theory, such, for instance, as that the court had no
jurisdiction, the party who induced it to adopt such theory will not be permitted, on appeal,
to assume an inconsistent position — that the lower court had jurisdiction. Here, the
principle of estoppel applies. The rule that jurisdiction is conferred by law, and does not
depend upon the will of the parties, has not bearing thereon.

The rule was reiterated in Calimlim vs. Ramirez (118 SCRA 399, 406), and quite recently, in Southeast
Asian Fisheries Development Center-Aquaculture Department vs. National Labor Relations
Commission (206 SCRA 283).
JURISDICTION cases 3rd set

Jurisdiction over the nature of the action, in concept, differs from jurisdiction over the subject matter.
Illustrated, lack of jurisdiction over the nature of the action is the situation that arises when a court, which
ordinarily would have the authority and competence to take a case, is rendered without it either because
a special law has limited the exercise of its normal jurisdiction on a particular matter or because the type
of action has been reposed by law in certain other courts or quasi-judicial agencies for determination.
Nevertheless, it can hardly be questioned that the rules relating to the effects of want of jurisdiction over
the subject matter should apply with equal vigor to cases where the court is similarly bereft of jurisdiction
over the nature of the action.

In summary, it is our considered view, as we now so hereby express,

that —

(1) Jurisdiction over the person must be seasonably raised, i.e., that it is pleaded in a motion to dismiss or
by way of an affirmative defense in an answer. Voluntary appearance shall be deemed a waiver of this
defense. The assertion, however, of affirmative defenses shall not be constructed as an estoppel or as a
waiver of such defense.

(2) Where the court itself clearly has no jurisdiction over the subject matter or the nature of the action, the
invocation of this defense may be done at any time. It is neither for the courts nor the parties to violate or
disregard that rule, let alone to confer that jurisdiction, this matter being legislative in character. Barring
highly meritorious and exceptional circumstances, such as hereinbefore exemplified, neither estoppel nor
waiver shall apply.

In the case at bench, the want of jurisdiction by the court is indisputable, given the nature of the
controversy. The arbitration law explicitly confines the court's authority only to pass upon the issue of
whether there is or there is no agreement in writing providing for arbitration. In the affirmative, the statute
ordains that the court shall issue an order "summarily directing the parties to proceed with the arbitration
in accordance with the terms thereof." If the court, upon the other hand, finds that no such agreement
exists, "the proceeding shall be dismissed." The proceedings are summary in nature.

All considered, the court a quo must then refrain from taking up the claims of the contending parties for
damages, which, upon the other hand, may be ventilated in separate regular proceedings at an opportune
time and venue. The circumstances obtaining in this case are far, we hold, from justifying the application
of estoppel against either party.

WHEREFORE, the decision of the Court of Appeals and the orders of the trial court in question are SET
ASIDE. The court a quo, in the instant proceedings, is ordered to DESIST from further hearing private
respondent's claim, as well as petitioner's counterclaim, for damages. No costs.

SO ORDERED.