Case Digest (G.R. No. 147324)
Facts:
Philippine Communications Satellite Corporation v. Globe Telecom, Inc., G.R. Nos. 147324 and 147334, May 25, 2004, Supreme Court Second Division, Tinga, J., writing for the Court.For several years before 1991, Globe Mackay Cable and Radio Corporation (now Globe Telecom, Inc.) coordinated communications facilities serving United States military installations at Clark Air Base and Subic Naval Base (Cubi Point). Those facilities were installed and operated exclusively for the United States Defense Communications Agency (USDCA), and, for security reasons, were operated only by USDCA personnel or American contractors; Globe in turn contracted with local providers, including Philippine Communications Satellite Corporation (Philcomsat).
On May 7, 1991, Philcomsat and Globe executed an agreement under which Philcomsat would establish and operate an IBS Standard B earth station at Cubi Point exclusively for USDCA use for a 60‑month term; Globe agreed to pay monthly rentals per leased circuit. Both parties were aware that the RP‑US Military Bases Agreement (the legal basis for US presence at Subic) would expire in 1991 and that any continued US presence would depend on diplomatic/treaty processes and Senate concurrence under the 1987 Constitution.
On September 16, 1991 the Senate adopted Resolution No. 141 refusing to concur in the ratification of the Treaty of Friendship, Cooperation and Security. On December 31, 1991 the Philippine Government sent a Note Verbale to the US notifying termination of the RP‑US Military Bases Agreement effective December 31, 1992 and calling for withdrawal of US forces by that date. Globe received a formal order and notices in mid‑1992 and on August 6, 1992 notified Philcomsat it would discontinue use effective November 8, 1992, invoking Section 8 (force majeure/default) of the Agreement. Philcomsat replied on August 10, 1992 insisting Globe remained obligated to pay rentals for the remaining term under Section 7.
After the US withdrawal at year‑end 1992, Philcomsat demanded outstanding payments (US$4,910,136.00 plus interest and fees); Globe refused. Philcomsat filed suit on January 27, 1995 in the Regional Trial Court (RTC) of Makati, Branch 59, seeking liquidated damages, interest, exemplary damages, attorney’s fees and costs. Globe answered, asserting force majeure and termination excusing further rentals.
On January 5, 1999 the RTC rendered judgment ordering Globe to pay US$92,238.00 (rentals for December 1992), attorneys’ fees of P300,000 and dismissing Globe’s counterclaim. Both parties appealed to the Court of Appeals (CA). The CA, in a February 27, 2001 decision (CA‑G.R. CV No. 63619), dismissed Philcomsat’s appeal and affirmed the trial court insofar as it found events constituting force majeure under Section 8 that justified Globe’s non‑payment for the remainder of the contract; the CA held Globe nonetheless liable for December 1992 rentals because full US withdrawal occurred only December 31, 1992. The CA deleted the trial court’s award of attorneys’ fees and denied exemplary damages.
Both parties filed petitions for review in the Supreme Court (Rule 45 petitions). The Court gave due course to both petitions, required memoranda,...(Pro-only)
Issues:
- Did the non‑ratification of the Treaty of Friendship, Cooperation and Security, the termination of the RP‑US Military Bases Agreement and the consequent withdrawal of US forces from Cubi Point constitute force majeure that exempted Globe from its rental obligations under the parties’ agreement?
- Is Globe liable to pay rentals under the Agreement for the month of December 1992?
- Is Philcomsat entitled to ...(Pro-only)
Ruling:
- (Pro-only)
Ratio:
- (Pro-only)
Doctrine:
- (Pro-only)