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Koppel Vs Makati Rotary

This case involved a dispute over a lease agreement between Koppel, Inc. and Makati Rotary Club Foundation, Inc. Koppel was the registered owner of land that had been donated conditionally to Makati Rotary Club in 1975. The donation stipulated a 25-year lease that could be renewed for another 25 years by mutual agreement, with any disagreements to be arbitrated. The parties executed successive short-term lease extensions in 2000 and 2005. Koppel then stopped paying rent and filed a case to cancel the donation. Makati Rotary filed an ejectment case. The court ruled the dispute was subject to arbitration per the 2005 lease agreement, as the disagreement arose from its application and the arbitration clause was separable

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Daniela Erika Beredo Inandan
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1K views2 pages

Koppel Vs Makati Rotary

This case involved a dispute over a lease agreement between Koppel, Inc. and Makati Rotary Club Foundation, Inc. Koppel was the registered owner of land that had been donated conditionally to Makati Rotary Club in 1975. The donation stipulated a 25-year lease that could be renewed for another 25 years by mutual agreement, with any disagreements to be arbitrated. The parties executed successive short-term lease extensions in 2000 and 2005. Koppel then stopped paying rent and filed a case to cancel the donation. Makati Rotary filed an ejectment case. The court ruled the dispute was subject to arbitration per the 2005 lease agreement, as the disagreement arose from its application and the arbitration clause was separable

Uploaded by

Daniela Erika Beredo Inandan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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G.R. No. 198075. September 4, 2013.

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


FACTS:
Petitioner, a manufacturer of air-conditioning products, was the registered owner
of a parcel of subject land. In 1975, FKI bequeathed the subject land in favor of
herein respondent by way of a conditional donation. The stipulations in the
donation provides that: (a) the period of lease shall be for 25 years; (b) The lease is
subject to renewal for another 25 years upon mutual agreement; (c) in case of
disagreement, the matter shall be referred to a Board of Arbitrators. Before the
lease contract was set to expire, FKI and Makati Rotary Club executed the 2000
Lease Contract extending the lease for 5 years. After the 2000 Lease Contract
expired, petitioner and respondent agreed to renew their lease for another 5 years
and executed the 2005 Lease Contract. Koppel discontinued the payment of the
rentals and “donations” under the 2005 Lease Contract and refused to comply with
the demands of the respondent and instead, filed with RTC Paranaque a complaint
for the rescission or cancellation of the Deed of Donation. Thereafter, Makati
Rotary Club filed an unlawful detainer case against Koppel before MTC
Paranaque. In the ejectment suit, Koppel reiterated its objections over the rental
stipulations of the 2005 Lease Contract and questioned the jurisdiction of the MTC
in view of the arbitration clause contained in the Lease Contract.
ISSUE:
Whether or not the 2005 Lease Contract is subject to arbitration
RULING:
YES. The dispute between the petitioner and respondent arose from the application
or execution of the 2005 Lease Contract. Undoubtedly, such kinds of dispute are
covered by the arbitration clause of the 2005 Lease Contract. 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. Arbitration before the Panel of Arbitrators is proper only
when there is a disagreement between the parties as to some provisions of the
contract between them. It is not proper when one of the parties repudiates the
existence or validity of such contract or agreement. The validity of the contract
cannot be subject of arbitration proceedings and are matters within the jurisdiction
of the ordinary courts of law. 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.

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