54.

] Philcomsat vs Globe Telecom 429 SCRA 153 (2004)

FACTS
-for several years before 1991, globe coordinated the provision of various communication facilities for US military bases in Clark Air
Base and Subic Naval Base
-the US Defense Communications Agency (USDCA) contracted with American companies to operate its communication facilities for
its military bases. The
American companies in turn contracted with Globe for the use of their communication facilities. Globe in turn entered into an
Agreement with the Philippine Communications Satellite Corp. (Philcomsat) for a term of 5 years, whereby the latter would obligate
itself to establish, operate and provide an IBS
Standard B earth station for the use of USDCA.
-at the time of the execution of the Agreement, both parties knew the RP-US Military Bases Agreement, the basis for the occupancy
of the Clark and Subic bases, was to expire in 1991.
-Art XVIII Sec 25 of the 1987 Constitution states that such foreign bases, its facilities, troops personnel, shall not be allowed into the
Philippines unless a new treaty is concurred in by the Senate and ratified by a majority vote of the people in a national referendum.
9/16/91: the Senate passed Resolution No. 141, expressing its decision not to concur w/ the ratification of the Treaty of Friendship,
Cooperation and Security w/c was extend the USs term of use of Subic Naval Base, further seeking the withdrawal of all US military
forces by 12/31/92
8/06/92: Globe notified Philcomsat of its intention to discontinue the use of the earth stations in view of the withdrawal of the US
forces invoking Sec 8 of their Agreement w/c states:
neither party will be held liablefor any failure to perform its obligation under this Agreement if such failure results directly or
indirectly from force majeure including any law, order, regulation, direction or request of the Government of the
Philippines
-Philcomsat replied, citing Sec 7 on Discontinuance of Service of the same Agreement:
Notwithstanding the non-use of the earth station, Globe shall continue to pay
Philcomsat for the rental of the actual number of T1 circuits in usefor the remaining life of the Agreement
-after the US forces left, Philcomsat filed a complaint at the RTI of Makati demanding the payment of its outstanding obligations
amounting to $4,910,136 plus interest and attys fees
-Globe answered insisting that it was exempt from paying since the bases ceased operations
1/05/99: the trial court rendered its decision, ordering Globe to pay Philcomsat $92,238 rental for the month of Dec. and P300,000
as attys fees, the dismissal of the counterclaim
-both parties appealed to the CA. Philcomsat claimed that the RTC erred in considering the non -ratification of the Treaty as force
majeure, exempting Globe from complying w/ its obligations under the Agreement and paying Philcomsat exemplary damages.
Globe contented that the RTC erred in holding it liable for the
Dec. rental fees
-both appeals were dismissed; both parties later filed their respective Petitions for
Review w/c gave rise to the ff issues w/c the court was tasked to resolve:
ISSUES
1. WON the termination of the RP-US Military Bases Agreement, the non-ratification of the Treaty of Friendship, Cooperation and
Security, and the withdrawal of the US military forces constitute force majeure exempting Globe from payment
2. WON Globe is liable to pay rental for the month of December, 1992 3. WON Philcomsat is entitled to attys fees
and exemplary damages
HELD
No reversible error was committed by the CA in issuing the assailed decision hence petitions are denied
1. YES. Philcomsat contends that Sec 8 of the Agreement should be taken in line w/ Art. 1174 of the Civil Code, and that the
termination of the RP-US Military Bases
Agreement cannot be considered force majeure since the happening was foreseeable. However, Art. 1174 also states that no
person shall be responsible for those events whichthough foreseen were inevitable
Art 1306 CC: parties may establish stipulations, terms and conditions so long as these do not counter any law, morals, public policy,
etc.
Art 1159 CC: obligations arising from contracts have the force of law between the contracting parties and should be complied w/ in
good faith
-the agreement as to what would constitute fortuitous events in Sec 8 does not run contrary to or expand the concept of fortuitous
events under Art. 1174
-Courts cannot stipulate/amend for the parties if the Agreement does not contravene law, morals, public policy and such; hence, Sec
8 has the force of law between the parties
-for Globe to be exempt from non -compliance w/ its obligation to pay rental under Sec 8, the ff must be established: (1) the event

must be independent of human will (2) the occurrence must render it impossible for the debtor to fulfill his obligation in a normal
manner (3) the obligor must be free of participation in, or aggravation of, the injury to the creditor
-the SC agrees w/ CA and the TC that the said requisites are present in the present case. Both parties had no control over the nonrenewal of the RP-US Military Bases Agreement or the subsequent withdrawal of the US forces from Subic
-Also, the Court found it unjust to require Globe to continue paying even though
Philcomsat cannot be compelled to continue performing its obligation under the
Agreement
2. YES. Although Globe alleged that it terminated the Agreement w/ Philcomsat effective 11/08/92, the US military forces and
personnel completely withdrew only on 12/31/92
3. NO. Since both parties have legitimate claims against each other and no party prevailed, an award of attys fees is unwarranted.
Exemplary damages may be awarded if the erring party acted in a wanton, fraudulent, reckless, oppressive or malevolent manner
however, Globe did not.
Disposition petitions are DENIED for lack of merit. The assailed decision of the CA is affirmed.