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  • Koppel Vs MCFI

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    Agnes Lintao
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    Koppel, Inc. vs. Makati Rotary Club Foundation, Inc. involved a dispute over a lease agreement for land owned by Makati Rotary Club Foundation, Inc. (MRCFI) that was originally donated to them with the condition that Fedder Koppel Incorporated (FKI) would lease the land. The 2005 lease agreement between the parties contained an arbitration clause. When a dispute arose over payments due under the lease, MRCFI filed an unlawful detainer case instead of pursuing arbitration. The Supreme Court ruled that the arbitration clause was valid and separable from the main contract based on the doctrine of separability, so the case should have been referred to arbitration instead of being heard in court

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    Arbitration Alternative Dispute Resolution

    Original Title

    Koppel vs MCFI

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    Koppel, Inc. vs. Makati Rotary Club Foundation, Inc. involved a dispute over a lease agreement for land owned by Makati Rotary Club Foundation, Inc. (MRCFI) that was originally donated to them with the condition that Fedder Koppel Incorporated (FKI) would lease the land. The 2005 lease agreement between the parties contained an arbitration clause. When a dispute arose over payments due under the lease, MRCFI filed an unlawful detainer case instead of pursuing arbitration. The Supreme Court ruled that the arbitration clause was valid and separable from the main contract based on the doctrine of separability, so the case should have been referred to arbitration instead of being heard in court

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    © All Rights Reserved
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    197 views2 pages

    Koppel Vs MCFI

    Uploaded by

    Agnes Lintao
    Koppel, Inc. vs. Makati Rotary Club Foundation, Inc. involved a dispute over a lease agreement for land owned by Makati Rotary Club Foundation, Inc. (MRCFI) that was originally donated to them with the condition that Fedder Koppel Incorporated (FKI) would lease the land. The 2005 lease agreement between the parties contained an arbitration clause. When a dispute arose over payments due under the lease, MRCFI filed an unlawful detainer case instead of pursuing arbitration. The Supreme Court ruled that the arbitration clause was valid and separable from the main contract based on the doctrine of separability, so the case should have been referred to arbitration instead of being heard in court

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    of 2

    Koppel, Inc. vs. Makati Rotary Club Foundation, Inc.

    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.

    It is clear that under the law, the instant unlawful detainer action should have
    been 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. Koppel, Inc. vs.
    Makati Rotary Club Foundation, Inc., 705 SCRA 142, G.R. No. 198075 September
    4, 2013

    FACTS:
    Fedder Koppel Incorporated (KFI) own a parcel of land and said land was
    donated to the Makati Rotary Club Foundation, Inc (MRCFI). One of the
    conditions of the donation required the MRCFI to lease the subject land back to
    FKI under terms specified in their Deed of Donation which the respondent
    accepted.

    In 1976, FKI and the respondent executed an amended deed of donation that
    reiterated the provisions of the deed of donation and hence FKI continue to
    possess and use the land.

    In 2000, two days prior to the expiration of the lease, FKI and respondent
    executed another contract of lease covering the same land, the duration of
    which was 5 years. Said contract contained an arbitration clause which states
    that in case of disagreement about the interpretation, application and
    execution of the lease, it shall be submitted to a board of three (3) arbitrators
    constituted in accordance with the arbitration law of the Philippines and that
    the decision of the majority of the arbitrators shall be binding upon KPI and
    the MRCFI.

    In 2005, the contract was again renewed for another five (5) years and an
    arbitration clause similar to the previous contract was indicated therein. In
    June 2008, FKI sold all its rights and properties relative to its business in favor
    of herein petitioner Koppel, Inc. The following year, Koppel refused to pay 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 cannot be given effect because they violated one of
    the material conditions of the donation of the subject land.
    MRCF sent several demand letters for Koppel, Inc. to pay its obligation but
    remained unheeded, hence MRCF filed an unlawful detainer case against
    Koppel. The MeTC rendered judgment in favor of the petitioner. The respondent
    appealed to the RTC and the RTC reversed the decision and ordered the
    eviction of the petitioner from the subject land.

    Aggrieved, the petitioner appealed to the CA, hence this court:

    ISSUE:
    Whether or not the 2005 lease contract is arbitrable?

    HELD:
    Yes. 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. To the mind of the
    Court, such stipulation is clear and is comprehensive enough so as to include
    virtually any kind of conflict or dispute that may arise from the 2005 Lease
    Contract including the one that presently besets petitioner and respondent.

    While the validity of the contract may still be in question, the 2005 lease
    agreement would not be rendered non-arbitrable. The petitioner may still
    invoke the arbitration clause of the 2005 Lease Contract notwithstanding the
    fact that it assails the validity of such contract. This due to the 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.

    It is clear that under the law, the instant unlawful detainer action should
    have been 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. WHEREFORE,
    premises considered, the petition is hereby GRANTED. Case is remanded back
    to the MeTC.

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