LA NAVAL DRUG CORPORATION v. CA , GR No.

103200, 1994-08-31
Facts:

 The present case before us concerns the jurisdiction of the courts, regarding the
provisions of Section 6 of the Republic Act No. 876, and in this respect the applicability
of the doctrine of estoppel. Act (R.A. 876), especially Section 6.
 Plaintiff's claim for damages is based on the alleged acts of the Naval Drug Corporation
Defendant, such as their alleged delay and interference tactics, etc. in the performance
of the arbitration agreement in the lease, thereby, among other things, forcing the
plaintiff to go to court to settle; and counterclaims for damages of Defendant Naval
Drugs may be heard by this Court at a non-briefing hearing for that purpose, in
accordance with the Rules of the Court.
 From defendant Yao's motion below, it appears that he is the current owner of a
commercial building, part of which is leased to the plaintiff under a lease signed on
December 23. in 1983 with its former owner, La Proveedora, Inc., the contract expired
on April 30, 1989. However, the petitioner exercised his option to lease the same
building for 5 years again. But the petitioner and defendant Yao did not agree on the
rent, and to resolve the dispute, the latter, in writing notifying the former, expressed their
intention to submit their disagreement to arbitration. Arbitration, pursuant to Republic Act
876, also known as the Arbitration Act, Defendant Yao appointed Domingo Alamarez, Jr.
as its arbitrator, while on 5 June 1989 the applicant selected Atty. Casiano Sabile as the
referee. The confirmation of the appointment of Aurelio Tupang, as the third arbitrator, is
still pending because the petitioner asked Atty. Sabile will delay the same until his board
of directors can meet and approve Tupang's nomination. Defendant Yao speculated that
the applicant's intention to delay arbitration proceedings violated the arbitration law and
the terms governing their tenancy.
 The defendant's court is a special court that exercises limited jurisdiction and has no
jurisdiction over defendant Yao's claim for damages, which raises a contentious issue in
an ordinary civil action. But the defendant's court was not convinced by the applicant's
argument.
 Although the Court of Appeals agreed with Plaintiff that, pursuant to Section 6 of
Republic Act No. 876, a court, acting within its special jurisdiction, could in this case
adjudicate only question whether the parties should resort to arbitration however,
considered the petitioner in estoppel did not question the authority of the court to hear
and adjudicate further in the context of the dispute scene of the summary proceedings
on the defendant's damages claim, he (the petitioner) filed his own counterclaim in court.
Issues:

 The court lacks jurisdiction over the defendant's person

Ruling:

 The lack of jurisdiction over the respondent's person may be the subject of an explicit or
implicit waiver. When the defendant appears voluntarily, he is deemed to have submitted
to the jurisdiction of the court. If he does not wish to waive this right of defense, he shall
do so object by petition to challenge the jurisdiction of the court; otherwise, he is deemed
to have submitted to that jurisdiction. The decisions issued to date by this Court will
 clearly also apply estoppel to bar the defendant pursues this defense by alleging in its
response any other means of refuting the action.
 "A voluntary appearance corrects deficiencies in the subpoena, if any. Those defects, if
any, were remedied when the respondent filed a response. The respondent is not
permitted to speculate on the judgment. of the court when objecting to the court's
authority to hear his person if the judgment is against him, and to accept jurisdiction over
his person if and when the judgment is in favor of his defense me."
The authority over that person must be appropriately elevated, i.e. that right is given in a
motion of rebuttal or by affirmative defense in an answer. Voluntary appearance
constitutes a waiver of this right of defense. However, the assertion of the affirmative
defense shall not be construed as an objection or a waiver of that defense.
In this case, the incompetence of the arbitrator was indisputable, given the nature of the
dispute.
 The Arbitration Act expressly limits a court's authority to adjudicate only as to whether or
not a written agreement provides... arbitration. If so, the statute instructs that the court
issue an order "to summarize instructions for the parties to proceed with the arbitration
on its terms." Conversely, if the court finds that such an agreement does not exist, the
"procedure will be set aside". Procedure is summary in essence.
Monitoring, the decision of the Court of Appeals and the order of the trial court in
progress are impressed. The court, in the current proceedings, was found not to want to
hear further claims of the individual defendant, because as well as the applicant's
counterclaim for damages. No charge.