Case Digest (G.R. No. L-62157)
Facts:
In Philippine Communications Satellite Corporation v. Globe Telecom, Inc. (G.R. Nos. 147324 & 147334, May 25, 2004), the dispute arose from a May 7, 1991 contract between Philippine Communications Satellite Corporation (Philcomsat) and Globe Mackay Cable and Radio Corporation (now Globe Telecom, Inc.) to establish and operate an IBS Standard B earth station at Subic Naval Base, Cubi Point, for exclusive use by the U.S. Defense Communications Agency (USDCA). The five-year Agreement provided that Globe would pay monthly rentals to Philcomsat for leased circuits, minimum two T1 lines, even if service was discontinued, unless Philcomsat resold or reused the facility. Both parties were aware that the RP-US Military Bases Agreement was to expire on December 31, 1992, and that under Section 25, Article XVIII of the 1987 Constitution, any extension required Senate concurrence and a referendum. On September 16, 1991, the Senate adopted Resolution No. 141, declining to ratify the Treaty oCase Digest (G.R. No. L-62157)
Facts:
- Contracting background
- Globe McKay Cable and Radio Corporation (now Globe Telecom, Inc.) coordinated communications facilities exclusively for the U.S. Defense Communications Agency (USDCA) at Clark Air Base and Subic Naval Base. American contractors subcontracted to Globe, which in turn contracted with Philippine Communications Satellite Corporation (Philcomsat).
- On May 7, 1991, Globe and Philcomsat executed a 60-month Agreement for an IBS Standard B earth station at Cubi Point, exclusively for USDCA use, with Globe paying monthly rentals. Both parties knew the RP-US Military Bases Agreement was to expire in 1991.
- Force majeure events and contract termination
- September 16, 1991: Senate Resolution No. 141 declined to concur in the Treaty of Friendship, Cooperation and Security (which would have extended U.S. base use) and reaffirmed friendly relations.
- December 31, 1991: Philippines notified the U.S. via Note Verbale that the RP-US Military Bases Agreement would terminate December 31, 1992, requiring withdrawal of U.S. forces by that date.
- August 6, 1992: Globe advised Philcomsat it would discontinue use of the earth station effective November 8, 1992, invoking Section 8 (force majeure) of their Agreement.
- August 10, 1992: Philcomsat replied, citing Section 7’s 60-day notice and minimum-rental provisions for the remaining term.
- November 24, 1993: Philcomsat demanded payment of US$4,910,136 plus interest and attorney’s fees; Globe refused.
- January 27, 1995: Philcomsat filed suit in the RTC of Makati for liquidated damages, interest, attorney’s fees, and exemplary damages; Globe counterclaimed force majeure.
- Trial and appellate decisions
- RTC Decision (January 5, 1999): Ordered Globe to pay US$92,238 (December 1992 rental) with 12% interest from December 1992, P300,000 attorney’s fees; dismissed Globe’s counterclaim.
- CA Decision (February 27, 2001): Held that the Senate resolution, Note Verbale, U.S. Navy orders, and full U.S. withdrawal (December 31, 1992) were force majeure events justifying non-payment after December 1992, but affirmed liability for the December 1992 rental only.
Issues:
- Do the termination of the RP-US Military Bases Agreement, the Senate’s non-ratification of the extension treaty, and the withdrawal of U.S. forces constitute force majeure under the Globe-Philcomsat Agreement?
- Is Globe liable for rental payments for December 1992?
- Is Philcomsat entitled to attorney’s fees and exemplary damages?
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)