KOPPEL, INC. v. MAKATI ROTARY CLUB FOUNDATION, INC., G.R. No. 198075, September 4, 2013

Arbitration; Doctrine of separability. Under the doctrine of separability, an arbitration agreement is considered as independent of the main contract. Being a separate contract in itself, the arbitration agreement may thus be invoked regardless of the possible nullity or invalidity of the main contract. As a further consequence of the doctrine of separability, even the very party who repudiates the main contract may invoke its arbitration clause.

Formal request to arbitrate. The salient wordings of Rule 4.1 [of A.M. No. 07-11-08-SC or the Special Rules of Court on Alternative Dispute Resolutionreads: “[a] party to a pending action filed in violation of the arbitration agreement x x x may request the court to refer the parties to arbitration inaccordance with such agreement.” In using the word “may” to qualify the act of filing a “request” under Section 24 of R.A. No. 9285, the Special ADR Rules clearly did not intend to limit the invocation of an arbitration agreement in a pending suit solely via such “request.” After all, non-compliance with an arbitration agreement is a valid defense to any offending suit and, as such, may even be raised in an answer as provided in our ordinary rules of procedure. In this case, it is conceded that petitioner was not able to file a separate “request” of arbitration before the MeTC. However, it is equally conceded that the petitioner, as early as in its Answer with Counterclaim, had already apprised the MeTC of the existence of the arbitration clause in the 2005 Lease Contract and, more significantly, of its desire to have the same enforced in this case. This act of petitioner is enough valid invocation of his right to arbitrate.

Judicial dispute resolution distinguished from arbitration. The JDR framework is based on the processes of mediation,conciliation or early neutral evaluation which entails the submission of a dispute before a “JDR judge” who shall merely “facilitate settlement” between the parties in conflict or make a “non-binding evaluation or assessment of the chances of each party’s case.” Thus in JDR, the JDR  judge lacks the authority to render a resolution of the dispute that is binding upon the parties in conflict. In arbitration, on the other hand, the dispute is submitted to an arbitrator/s — a neutral third person or a group of thereof — who shall have the authority to render a resolution binding upon the parties.