LA Naval v CA GR. No.

103200

Facts: Yao, was the owner of a commercial building, which was leased by La Nava, However,
during the renewal of the contract of lease, the two disagreed on the rental rate and thus, they
submitted their disagreement to arbitration pursuant to R.A. 876 and Sec. 7 of their lease
contract.

Yao filed a Special Civil case under Sec. 6 of R.A. 876 on the ground that La Naval was trying
to delay the arbitration proceeding . In its reply, La Naval filed counterclaim with damages.

Yao amended its petition for Enforcement of Arbitration Agreement with Damages. RTC
granted in favor of Yao and ordered the parties to submit their position papers on the issue of
Yao’s claim of damages.

La Naval filed for Motion for Reconsideration alleging that the RTC has no jurisdiction for
Yao’s claim for damages but is denied. This prompted La Naval to file the case to CA, which
later reversed the RTC’s decision. It agreed with La Naval that, under Section 6 of RA no. 876, a
court, acting within the limits of its special jurisdiction, may in this case solely determine the
issue whether the litigants should proceed to or not with the arbitration, it, however, considered
La Naval precluded from questioning the competence of the court to additionally hear and decide
in the summary proceedings of Yao’s claim of damages, it having itself filed similarly its own
counterclaim with the court of quo

Issue: 1. Whether or not Court of qui has jurisdiction over the subject matter (Yao’s claim of
damages). NO

Ruling: The court ruled that the court has no jurisdiction over Yao’s claim of damages. Under
Section 2, Rule 9, Rules of Court, it provides that when the Court has no jurisdiction, the action
shall be dismissed. This defense may be interposed at any time, during the trial. Such is
understandable, as this kind of jurisdiction is conferred by law and not within the courts, let
alone the parties themselves determine or conveniently set aside.

In the case at bar, the want of jurisdiction by the court is indisputable, given the nature of
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 finds that no
such agreement exists, the proceeding shall be dismissed.

Thus, the court 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
opportune time and venue.
 2. Whether or not La Naval is estopped from invoking lack of jurisdiction. NO

La Naval is not estopped because the doctrine of estoppel is not applicable in this case,
where the court has no jurisdiction over Yao’s claim of damages, the subject matter.

The operation of the doctrine of estoppel on the question of jurisdiction seemingly depends
upon whether the court has a jurisdiction or not

If the court had no jurisdiction If the court had jurisdiction

- decided upon the theory that it had jurisdiction
- parties are not barred, on appeal, from assailing
such jurisdiction, for the same “ must exist as a
matter of law”
- Decided upon the theory that the court had no
jurisdiction
- Parties will not be permitted, on appeal, to
assume an inconsistent position

- may not be conferred by consent of the parties - Principle of estoppel will apply
or by estoppel