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    Koppel, Inc. vs. Makati Rotary Club Foundation, Inc., G.R. No. 198075, September 4, 2013

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    Rommel P. Abas
    This case involved a dispute over a lease agreement between Koppel, Inc. and Makati Rotary Club Foundation regarding a parcel of land. The Supreme Court ruled that the dispute was subject to arbitration based on the arbitration clause in the 2005 lease contract. While Koppel argued the validity of the contract, the arbitration clause was considered independent and separable. The prior judicial dispute resolution proceedings also did not preclude subsequent arbitration given the non-binding nature of JDR versus binding arbitration.

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    Koppel, Inc. vs. Makati Rotary Club Foundation, Inc., G.R. No. 198075, September 4, 2013

    Uploaded by

    Rommel P. Abas
    110 views12 pages
    This case involved a dispute over a lease agreement between Koppel, Inc. and Makati Rotary Club Foundation regarding a parcel of land. The Supreme Court ruled that the dispute was subject to arbitration based on the arbitration clause in the 2005 lease contract. While Koppel argued the validity of the contract, the arbitration clause was considered independent and separable. The prior judicial dispute resolution proceedings also did not preclude subsequent arbitration given the non-binding nature of JDR versus binding arbitration.

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    Koppel

    Original Title

    Koppel, Inc. vs. Mrcf

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    This case involved a dispute over a lease agreement between Koppel, Inc. and Makati Rotary Club Foundation regarding a parcel of land. The Supreme Court ruled that the dispute was subject to arbitration based on the arbitration clause in the 2005 lease contract. While Koppel argued the validity of the contract, the arbitration clause was considered independent and separable. The prior judicial dispute resolution proceedings also did not preclude subsequent arbitration given the non-binding nature of JDR versus binding arbitration.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as pptx, pdf, or txt
    110 views12 pages

    Koppel, Inc. vs. Makati Rotary Club Foundation, Inc., G.R. No. 198075, September 4, 2013

    Uploaded by

    Rommel P. Abas
    This case involved a dispute over a lease agreement between Koppel, Inc. and Makati Rotary Club Foundation regarding a parcel of land. The Supreme Court ruled that the dispute was subject to arbitration based on the arbitration clause in the 2005 lease contract. While Koppel argued the validity of the contract, the arbitration clause was considered independent and separable. The prior judicial dispute resolution proceedings also did not preclude subsequent arbitration given the non-binding nature of JDR versus binding arbitration.

    Copyright:

    © All Rights Reserved
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    of 12

    KOPPEL, INC. VS.

    MAKATI ROTARY CLUB


    FOUNDATION, INC.,
    G.R. No. 198075, September 4, 2013

    FACTS:

    • Fedders Koppel, Incorporated (FKI), an air-


    conditioning manufacturer, owned a parcel of
    land located in Paranaque City. The land have
    buildings and improvements for the business
    of FKI.
    • In 1975, FKI left the land to Makati Rotary
    Club Foundation (MRCF) by way of a Deed of
    Donation.
    • Condition in the Deed of Donation executed
     MRCF will lease back the land to FKI
     Period of the lease – 25 years or until
    May 25, 2000
     Amount of lease for the first 25 years –
    P40,126.00 per annum
     Lease is renewable for another 25 years
    subject of a mutual agreement of the
    parties; if they cannot agree, then it be
    submitted to a panel of 3 arbitrators
    • In October 1976, the parties executed an
    Amended Deed of Donation reiterating the
    provisions of the Deed of Donation,
    incorporating the provisions in the lease of the
    subject land.
    • May 23, 2000 – FKI and MRCF executed the
    2000 Contract of Lease with the following
    conditions:
     annual rents ranging from P4,000,000
    (1st year) to P4,900,000 (5th year)
     contained arbitration clause in case of
    disagreement about the interpretation,
    application and execution of the lease.
     Board of 3 arbitrators in accordance of
    the arbitration laws of the Philippines.
    • After the expiration of the 2000 Lease
    Contract, parties agreed to renew the lease
    contract (2005 Lease Contract) with the
    following conditions:
     Fixed rent of P4,200,000 annually for 5
    years

     FKI must make an annual donation of


    money to MRCF P3m (1st year) to P3.9m
    (5th year)

     Contained arbitration clause in case of


    disagreement about the interpretation,
    application and execution of the lease
    similar to the 2000 lease contract
    • June 2008 – FKI sold all rights and properties
    to Koppel, Incorporated, assigning all its
    interests and obligations under the Amended
    Deed of Donation and the 2005 Lease
    Contract.
    • The following year Koppel refused to pay the
    rent and donation under the 2005 lease
    contract because it violated the material
    conditions of the donation of the land in the
    donation and amended deed of donation.
    • Demand letters were sent to petitioner (Koppel)
    notifying of its default and the demand for the
    settlement of its obligation and failure to settle
    the same is given 7 days to vacate the
    premises.
    • September 30, 2009 - Koppel refused to heed
    the demand from MRCF and instead filed a
    case for rescission or cancellation of the Deed
    of Donation and Amended Deed of Donation.
    • October 5, 2009 - MRCF filed an unlawful
    detainer case against Koppel before the MeTC
    of Paranaque.

     MeTC – Dismissed the petition


    insufficiency of the respondent’s (MRCF)
    demand and the nullity of the 2005
    Lease Contract
     RTC – reversed the MeTC and ordered
    the eviction of the petitioner (Koppel)
    from the subject land.
     CA – affirmed the decision of the RTC.

    • ISSUE:
    Whether or not the present dispute is
    subject to arbitration.

    • RULING:

     Yes. The dispute between the petitioner and


    respondent arose from the application or
    execution of the 2005 Lease Contract. Such
    kinds of dispute are covered by the arbitration
    clause of the 2005 Lease Contract.
    Any disagreement as to the interpretation,
    application or execution of this [2005 Lease
    Contract] shall be submitted to a board of three
    (3) arbitrators constituted in accordance with the
    arbitration law of the Philippines. The decision of
    the majority of the arbitrators shall be binding
    upon the parties.
     The disagreement between the petitioner and
    respondent falls within the all-encompassing
    terms of the arbitration clause of the 2005
    Lease Contract. While it may be conceded that
    in the arbitration of such disagreement, the
    validity of the 2005 Lease Contract, or at least,
    of such contract’s rental stipulations would
    have to be determined, the same would not
    render such disagreement non-arbitrable.
     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.

    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.
     The operation of the arbitration clause in this
    case is not at all defeated by the failure of
    the petitioner to file a formal “request” or
    application therefor with the MeTC.

    Petitioner was not able to file a separate “request”


    of arbitration before the MeTC. However, it is
    equally conceded that the petitioner 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.
     The fact that the petitioner and respondent
    already underwent through JDR proceedings
    before the RTC, will not make the subsequent
    conduct of arbitration between the parties
    unnecessary or circuitous. The JDR system is
    substantially different from arbitration
    proceedings.
    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.
     The mere submission of a dispute to JDR
    proceedings would not necessarily render the
    subsequent conduct of arbitration a mere
    surplusage. The failure of the parties in conflict
    to reach an amicable settlement before the JDR
    may, in fact, be supplemented by their resort
    to arbitration where a binding resolution to the
    dispute could finally be achieved.

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