1. Wilson Yao owned a commercial building.

2. A portion of the said building was being leased by La Naval Drug Corporation.

3. La Naval originally leased it from the original owner / predecessor of Wilson Yao, La Proveedora,
Inc., and exercised an option to lease it for another five years.

4. La Naval and Yao did not agree, however, on the rental rate.

5. Thus, Wilson Yao sought to submit the issue to arbitration following RA 876.

a. Yao appointed Domingo Alamarez Jr as arbitrator

b. La Naval Drug appointed Atty. Casino Sabile as arbitrator.

c. Sabile advised that the third arbitrator will not be announced prior the convening of La Naval
BOD.

d. Yao asked the court to hold a summary hearing and direct

i. Alamarez and Sabile to proceed with the arbitration and to appoint the third arbitrator.

ii. La Naval Drug to convene its BOD.

e. La Naval Drug however claimed that they are not delaying the arbitration, and that Yao was the
one who failed to formally require the two arbitrators to appoint the third arbitrator. Yao has no COA. 
LA NAVAL ASKED FOR DAMAGES and PAYMENT OF ATTY’S FEES.

f. In 1989 October  Yao then filed another petition before the court to Enforce the Arbitration
Agreement with damages, asking for interest and unpaid rents and damages.

g. La Naval said that this petition should be dismissed because

i. The docket fee was not filed

ii. A full blown trial was necessary.

h. La Naval moved to set the case for preliminary hearing of special and affirmative defenses.

i. Meanwhile, The third arbitrator was chosen (Eloisa Narciso)

j. The TC ordered the party to submit position papers as to WON Yao’s damages claim may be
litigated in a summary proceeding for the enforcement of the arbitration.

k. The TC then held that the damages case will be heard jointly with the motion of La Naval (to set
the case for preliminary hearing).

6. In 1990 April  La Naval assailed the TC decision through an MR  damages case should be
threshed out in an ordinary civil action.

7. The CA held that the TC can only act within its special jurisdiction (i.e., to determine whether or
not the litigants should proceed with the arbitration)…
8. HOWEVER, La Naval Drug Corporation is already estopped from questioning the competence of
the court to hear and decide the claim for damages.

 REASON: La Naval has likewise filed its counterclaim in the trial court.

9. Thus, the instant petition.

ISSUE: WON La Naval is estopped from questioning the jurisdiction of the court to hear the damages
case.  No. The SC sided with La Naval Corporation

10. The Court explained that Jurisdiction over the person must be seasonably raised.

11. And that Voluntary Appearance should be construed as waiver of the defense (of lack of
jurisdiction over a person)

 But then other affirmative defenses in the pleading will not be read as estoppel or waiver of the
defense of lack of jurisdiction over a person.

12. However, Jurisdiction over the subject matter is a different matter as it may be raised any time.

13. In the case at bar, it is clear that the arbitration law only limits the jurisdiction of the TC in the
summary proceeding as to WON there is an agreement providing for arbitration.

14. The damages case may be settled in an ordinary proceeding.