PSCS vs.

GLOBE TELECOM,

Facts: In 07 May 1991, Philcomsat and Globe Telecom entered in an agreement where
petitioner obliged itself to build, establish, operate an IBS Standard Earth Station within
Cubi Point for exclusive use of US Defense Communication Agency (because at that
time Globe was engaged in provision of communication facilities of US Military Bases in
PH). The Term of Agreement was for 5 years. Globe promised to pay Philcomsat
monthyly rentals for each leased circuit involved. However, after execution of said
agreement, the Military Bases Agreement (Treaty) between the Philippines and US will
expire in 1991 (same year). The Senate did not ratify/renew the said treaty. The US
Military Bases Agrement shall be terminated on December 31, 1992. Globe notified
Philcomsat of its intention to discontinue with their prior agreement as it will not provide
rent payments because the non-ratification of the treaty was stipulated to be a force
majeure on said written agreement. Philcomsat sent a demand letter to Globe. Despite
receipt of the letter, Globe refused to pay. A complaint was filed before the Regional
Trial Court of Makati. RTC rendered a judgment ordering Globe to pay rentals up to
December 1992 with legal interest of 12 % per annum. Both parties appealed to the CA.
CA ruled that Globe is liable for rents til December 1992 plus interest. Thus, this petition.

ISSUES: WON Termination of treaty is force majeure.

WON Globe is liable to pay rentals for the whole five years.

RULING: Petition Denied.

Discussion:

1. The Termination of treaty is force majeure as stipulated in their contract. It

does not run contrary to what is defined as a force majeure as defined in
Article 1174 of the New Civil Code. Non-ratification of the treaty although
foreseeable, it is beyond control of the parties. Courts also cannot amend an
agreement if it does not contravene the law, public morals, public policy,
and public order.

2. Since the Cubi Point was still accessible for the US military till December 1992,
Globe is still liable to pay by virtue of the contract. However as to the
payment for the remaining term, the court ruled that it would be unjust to
require Globe to pay for the unexpired term as the subject
telecommunication service had already ceased.