ALTERNATIVE DISPUTE RESOLUTION | KOPPEL INC, VS. MAKATI ROTARY CLUB FOUNDATION, INC., G.R. NO. 198075, SEPTEMBER 4, 2013

KOPPEL INC, VS. MAKATI ROTARY CLUB FOUNDATION, INC.,

G.R. NO. 198075, SEPTEMBER 4, 2013

 

TOPIC/DOCTRINE

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.

 

FACTS

The dispute between the petitioner and respondent emanates from the rental stipulations of the 2005 Lease Contract. The respondent insists upon the enforceability and validity of such stipulations, whereas, petitioner, in substance, repudiates them. It is from petitioner’s apparent breach of the 2005 Lease Contract that respondent filed the instant unlawful detainer action.

The arbitration clause of the 2005 Lease Contract stipulates that “any disagreement” as to the “interpretation, application or execution” of the 2005 Lease Contract ought to be submitted to arbitration.

The following year, petitioner discontinued the payment of the rent and “donation” under the 2005 Lease Contract.

Petitioner’s refusal to pay such rent and “donation” emanated from its belief that the rental stipulations of the 2005 Lease Contract, and even of the 2000 Lease Contract, cannot be given effect because they violated one of the “material conditions” of the donation of the subject land, as stated in the Deed of Donation and Amended Deed of Donation.

 

ISSUE

Whether petitioner may still invoke the arbitration clause of the 2005 Lease Contract notwithstanding the fact that it assails the validity of such contract.

 

RULING

Yes.

 

The court ruled that 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. Once again instructive is Cargill, wherein this Court held that, as a further consequence of the doctrine of separability, even the very party who repudiates the main contract may invoke its arbitration clause.

 

Here, the court ruled that Petitioner may still invoke the arbitration clause of the 2005 Lease Contract notwithstanding the fact that it assails the validity of such contract. This is due to the doctrine of separability. It is clear that under the law, the instant unlawful detainer action should have stayed; the petitioner and the respondent should have been referred to arbitration pursuant to the arbitration clause of the 2005 Lease Contract. The MeTC, however, did not do so in violation of the law — which violation was, in turn, affirmed by the RTC and Court of Appeals on appeal.








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