G.R. No. 103200 – 236 SCRA 78 – Remedial Law – Civil Procedure – Motion to Dismiss – Grounds for Dismissal
In 1989, a conflict between La Naval Drug Corporation and a certain Wilson Yao arose regarding a lease contract. Yao invoked a provision in the lease contract whereby pursuant to R.A. 876 (Arbitration Law), they should refer the matter to arbitration. Hence, the parties agreed to refer the issue to three arbitrators however, certain complications arose when they were choosing a third arbitrator. This prompted Yao to go to court to demand the arbitrators to proceed with the arbitration. Yao went to the regional trial court (Angeles City) and the case was filed as a summary proceeding case under R.A. 876. Yao also prayed for an award for damages in his favor.
In its answer, La Naval asserted that the case should be dismissed as it was filed prematurely; La Naval questioned Yao’s claim for damages as it averred that the same should be litigated independently and not in the same summary proceeding case. However, La Naval also posed a counterclaim.
The RTC resolved the matter regarding the arbitrators (it appointed a third arbitrator). The RTC also ruled that La Naval is estopped from questioning Yao’s claim for damages for being out of jurisdiction as La Naval itself filed a counterclaim for damages.
ISSUE: Whether or not the RTC has jurisdiction over the claims for damages between parties.
HELD: No. R.A. 876 is clear that summary proceedings under said law shall only involve the matter of arbitration. The parties’ claims for damages must be litigated in another civil case.
The Supreme Court went on to discuss that where the court clearly has no jurisdiction over the subject matter, in this case the claim and counterclaim for damages, the court must dismiss the case (in this case, the claim and counterclaim for damages). Lack of jurisdiction over the subject matter as a defense may be raised at any time. Failure to raise such defense shall not estop the defendant from raising such defense (as opposed to the defense of lack of jurisdiction over the person which is deemed waived if the defendant voluntarily appeared – if defendant voluntarily appeared, then he is estopped from raising that defense).
