Philcomsat v Globe Telecom Digest

May 25, 2004 | J. Tinga | Force Majeur PETITIONER: Philippine Communications Satellite Corporation RESPONDENT: Globe Telecom, Inc. SUMMARY: Respondent Globe was contracted by US to provide communication services for the latter’s defense in PH. Respondent Globe then engaged Petitioner Philcomsat as local service provider. They entered Agreement in 1991 for 5 year contract. In 1992, US left the Philippines. Petitioner then demanded for the Respondent’s standing obligation of $5M. Respondent cry force majeur. DOCTRINE: Obligor is exempted from liability due to force majeur circumstannces.

FACTS: 1. Respondent Globe is provider of communications facilities for US bases in Clark and Subic for the US Defense Communication Agency. 2. Respondent Globe then contracted with local service provider Philippine Communications Satellite Corporation (Philcomsat) for the provision of communication facilities. 3. On May 7, 1991, Petitioner Philcomsat and Respondent Globe entered into AGREEMENT to provide earth station for 5 years. They knew then that the Military Base Agreement was to expire in 1991. 4. In September 1991, Senate did not renew the Military Base Agreement. 5. In August 1992, Globe notified Philcomsat of its intention to discontinue Agreement citing force majeur. This is provided for in Sec. 8 [Default] of the said Agreement. 6. US was set to leave by December, 1992. 7. After the US left, Philcomsa demanded out from Globe the standing obligation of $5M from the Agreement. Philcomsat filed suit.in RTC. 8. RTC ordered Globe to pay Philcomsat $92 (rentals for the month of Dec. 1992). 9. CA ruled that the occurrence of Senat’s nonratification was indeed force majeur. But CA still held Globe liable to US’ rent of $92K for the month of December, 1992. 10. They raised to Court via Petition for Review.

ISSUE:

1. Whether or not US withdrawal following Senate’s non-ratification constituted force majeur? RULING: CA decision AFFIRMED. RATIO: 1. Article 1174 of the Civil Code exempts Obligor from liability due to force majeur which are unforeseeable or unavoidable. 2. Section 8 of the Agreement also states “laws, order of the Philippine government” as force majeur. Nothing in Section 8 runs contrary to Art. 1174 of the Civil Code. 3. Requisites for Force Majeur: a) Event is independent of human will; b) Event must render impossible for Debtor to fulfill obligation in normal manner; c) Obligor must be free of participation or aggravation of injury to the Creditor. (NOTE: Case did not include the unforeseeable and unavoidable aspect.) 4. Both parties had no control over the nonrenewal of the Bases Agreement for the prerogative to do so belonged to Philippine Senate. Nor did they have control of the US’ withdrawal in December 1992. 5. Events made it impossible for the continuation of the Agreement until the end of the 5-year term without fault of either party.