PHILCOMSAT vs. Globe Telecom

PHILCOMSAT vs. GLOBE TELECOM
G.R. No. 147324 May 25, 2004

Facts:

On May 7, 1991 Philcomsat & Globe entered into an agreement whereby Philcomsat obliged itself to establish, operate & provide an IBS standard B earth station for the exclusive use of US defense communications Agency (USDCA). The term was for 60 months or 5 yrs In turn, Globe promised to pay Philcomsat monthly rentals.

At the execution of the agreement, both parties knew that military Bases Agreement was to expire in 1991. Subsequently, Philcomsat installed the earth station & USDCA made use of the same.

The senate passed a resolution expressing its decision not to concur in the ratification of the treaty of friendship. So the RP-US Military bases Agreement terminate it on Dec. 31, 1992.

Globe notified Philcomsat its instruction to discontinue effective Nov. 8, 1992, in view of the withdrawal of US military personnel. Philcomsat sent a reply to pay the stipulated rentals even after Globe shall have discontinued the use of earth station after Nov. 8 1992.

After the US military force left Subic, Philcomsat sent a letter demanding payment. However, Globe refused to heed Philcomsat ‘s demand because the termination of the US military bases agreement constitute force majeure and said event exempted it from paying rentals.

Issue:
1. WON the termination of the RP-US Military Bases Agreement constitutes force majeure which would exempt Globe from complying with its obligation to pay rentals under its Agreement with Philcomsat? YES
2. WON Globe is liable to pay rentals under the Agreement for the month of December 1992? YES
3. WON Philcomsat is entitled to attorney’s fees and exemplary damages? NO

Held:

1.

In order that Globe may be exempt from non-compliance with its obligation to pay rentals under Section 8, the concurrence of the following elements must be established:
a. the event must be independent of the human will;
b. the occurrence must render it impossible for the debtor to fulfill the obligation in a normal manner; and
c. the obligor must be free of participation in, or aggravation of, the injury to the creditor.

Philcomsat and Globe had no control over the non-renewal of the term of the RP-US Military Bases Agreement when the same expired in 1991, because the prerogative to ratify the treaty extending the life thereof belonged to the Senate.
Resolution No. 141 of the Philippine Senate and the Note Verbale of the Philippine Government to the US Government are acts, direction or request of the Government of the Philippines and circumstances beyond the control of the defendant. The formal order from Cdr. Walter Corliss of the USN, the letter notification from ATT and the complete withdrawal of all the military forces and personnel from Cubi Point in the year-end 1992 are also acts and circumstances beyond the control of the defendant.

Article 1174, which exempts an obligor from liability on account of fortuitous events or force majeure, refers not only to events that are unforeseeable, but also to those which are foreseeable, but inevitable.

2.

The US military forces and personnel completely withdrew from Cubi Point only on 31 December 1992. Thus, until that date, the USDCA had control over the earth station and had the option of using the same. Furthermore, Philcomsat could not have removed or rendered ineffective said communication facility until after 31 December 1992 because Cubi Point was accessible only to US naval personnel up to that time. Hence, Globe is liable for payment of rentals until December 1992.

3.

Exemplary damages may be awarded in cases involving contracts or quasi-contracts, if the erring party acted in a wanton, fraudulent, reckless, oppressive or malevolent manner. In the present case, it was not shown that Globe acted wantonly or oppressively in not heeding Philcomsat’s demands for payment of rentals. Hence, there can be no award.

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