G.R. No. L-6648 July 25, 1955
Negros Occidental.
VICTORIAS PLANTERS ASSOCIATION, INC
vs.
VICTORIAS MILLING CO., INC
Petitioners Victorias Planters Association, Inc.
and North Negros Planters Association, Inc. are
non-stock corporations duly established and
were organized by sugar cane planters in the
districts of Victorias, Manapla and Cadiz,
respectively, having been established
principally as the representative entities of the
numerous sugar cane planters in said districts
whose sugar cane productions are milled by
the respondent corporation, with the main
object of safeguarding their interests and of
taking up with the latter problems and
questions which from time to time, may come
up between the said respondent corporation
the said sugar cane.
That at various dates, from the year 1917 to
1934, the sugar cane planters pertaining to the
districts of Manapla and Cadiz, Negros
Occidental, executed identical milling
contracts, setting forth the terms and
conditions under which the sugar central
"North Negros Sugar Co. Inc." would mill the
sugar produced by the sugar cane planters of
the Manapla and Cadiz districts which were
executed on. Contract was supposed t last for
30 years.
The North Negros Sugar Co., Inc. had its
milling during the 1918-1919 crop year,
and the Victorias Milling Co., had milling
during the 1921-1922 crop year.
Subsequent moliendas or millings took
place every successive crop year
thereafter, except the 6-year period,
comprising 4 years of the last World War
II and 2 years of post-war reconstruction
of respondent's central at Victorias,
"It is the view of the majority of the
That after the liberation, the North Negros
Sugar Co., Inc. did not reconstruct its destroyed
central at Manapla, Negros Occidental, and in
1946, it advised the North Negros Planters
Association, Inc. that it had made
arrangements with the respondent Victorias
Milling Co., Inc. for said respondent corporation
to mill the sugar cane produced by the planters
of Manapla and Cadiz holding milling contracts
with it. Thus, after the war, all the sugar cane
produced by the planters of petitioner
associations, in Manapla, Cadiz, as well as in
Victorias, who held milling contracts, were
milled in only one central, that of the
respondent corporation at Victorias;
In the year 1948, and in the following years,
when the planters-members of the North
Negros Planters Association, Inc. considered
that the stipulated 30-year period of their
milling contracts executed in the year 1918
had already expired and terminated in the crop
year 1947-1948, and the planters-members of
the Victorias Planters Association, Inc. likewise
considered the stipulated 30-year period of
their milling contracts, as having likewise
expired and terminated in the crop year 1948-
1949, under the pertinent provisions of the
standard milling contract.
Repeated representation were made with
respondent corporation for negotiations
regarding the execution of new milling
contracts which would take into consideration
the charged circumstances presently prevailing
in the sugar industry as compared with those
prevailing over 30 years ago and would provide
for an increased participation in the milled
sugar for the benefit of the planters and their
workers but respondent has refused and still
refuses to accede to the same, contending that
under the provisions of the mining contract .
stockholder-investors, that our contracts
with the planters call for 30 years of
milling not 30 years in time" and that
"as there was no milling during 4 years of
the recent war and two years of
reconstruction, when these six years are
added on to the earliest of our contracts
in Manapla, the contracts by this view
terminate in the autumn of 1952," and
the "the contracts for the Victorias
Planters would terminate in 1957, and
still later for those in the Cadiz districts,"
and that "apart from the contractual
agreements, the Company believes these
war and reconstruction years accrue to it
in equity.
The trial court rendered judgment which
declares that the milling contracts executed
between the sugar cane planters of Victorias,
Manapla and Cadiz, Negros Occidental, and the
respondent corporation or its predecessors-in-
interest, the North Negros Sugar Co., Inc.,
expired and terminated upon the lapse of the
therein stipulated 30-year period, and that
respondent corporation is not entitled to claim
any extension of or addition to the said 30-year
term or period of said milling contracts by
virtue of an equivalent to 6 years of the last
war and reconstruction of its central, during
which there was no planting and/or milling.
The appellant contends that the term
stipulated in the contracts is thirty milling
years and not thirty calendar years and
postulates that the planters fulfill their
obligation the six installments of their
indebtedness--which they failed to perform
during the six milling years from 1941-42 to
1946-47. The reason the planters failed to
deliver the sugar cane was the war or a
fortuitious event. The appellant ceased to
run its mill due to the same cause.
Fortuitious event relieves the obligor
from fulfilling a contractual
obligation.1 The fact that the contracts
make reference to "first milling" does not
make the period of thirty years one of
thirty milling years. The term "first
milling" used in the contracts under
consideration was for the purpose of
reckoning the thirty-year period
stipulated therein. Even if the thirty-year
period provided for in the contracts be
construed as milling years, the deduction
or extension of six years would not be
justified. At most on the last year of the thirty-
year period stipulated in the contracts the
delivery of sugar cane could be extended up to
a time when all the amount of sugar cane
raised and harvested should have been
delivered to the appellant's mill as agreed
upon. The seventh paragraph of Annex "C", not
found in the earlier is where the parties
stipulated that in the event of flood, typhoon,
earthquake, or other force majeure, war,
insurrection, civil commotion, organized strike,
etc., the contract shall be deemed suspended
during said period, does not mean that the
happening of any of those events stops the
running of the period agreed upon. It only
relieves the parties from the fulfillment of their
respective obligations during that time the
planters from delivering sugar cane and the
central from milling it. In order that the
central, the herein appellant, may be
entitled to demand from the other parties
the fulfillment of their part in the
contracts, the latter must have been able
to perform it but failed or refused to do
so and not when they were prevented
by force majeure such as war. To require
the planters to deliver the sugar cane which
they failed to deliver during the four years of
the Japanese occupation and the two years
after liberation when the mill was being rebuilt
is to demand from the obligors the fulfillment
of an obligation which was impossible of
performance at the time it became due. Nemo
tenetur ad impossibilia. The obligee not being
entitled to demand from the obligors the
performance of the latters' part of the
contracts under those circumstances cannot
later on demand its fulfillment. The
performance of what the law has written of
cannot be demanded and required. The prayer
that the plaintifs be compelled to deliver sugar
cane to the appellant for six more years to
make up for what they failed to deliver during
those trying years, the fulfillment of which was
impossible, if granted, would in efect be an
extension of the term of the contracts entered
into by and between the parties.
Despite the fact that the lease contract
stipulated seven sugar crops and not
seven crop years as the term thereof, we
held that such stipulation contemplated
seven consecutive agricultural years and
affirmed the judgment which declared
that the leasee was not entitled to an
extension of the term of the lease for the
number of years the country was
occupied by the Japanese Army during
which no sugar cane was planted 2 we are
of the opinion and so hold that the thirty-
year period stipulated in the contracts
expired on the thirtieth agricultural year.
The period of six years four during the
Japanese occupation when the appellant
did not operate its mill and the last two
during which the appellant reconstructed
its mill cannot be deducted from the
thirty-year period stipulated in the
contracts.
G.R. No. 147324 May 25, 2004
PHILIPPINE COMMUNICATIONS SATELLITE
CORPORATION vs.
GLOBE TELECOM, INC
For several years prior to 1991, Globe Mckay
Cable and Radio Corporation, now Globe
Telecom, Inc. (Globe), had been engaged in the
coordination of the provision of various
communication facilities for the military bases
of the United States of America (US) in Clark
Air Base, Angeles, Pampanga and Subic Naval
Base in Cubi Point, Zambales.
On 07 May 1991, Philcomsat and Globe entered
into an Agreement whereby Philcomsat
obligated itself to establish, operate and
provide an IBS Standard B earth station within
Cubi Point for the exclusive use of the
USDCA.2 The term of the contract was for 60
months, or five (5) years.3 In turn, Globe
promised to pay Philcomsat monthly rentals for
each leased circuit involved.4
At the time of the execution of the Agreement,
both parties knew that the Military Bases
Agreement between the Republic of the
Philippines and the US (RP-US Military Bases
was to expire in 1991. Under Section 25, Article
XVIII of the 1987 Constitution, foreign military
bases, troops or facilities, which include those
located at the US Naval Facility in Cubi Point,
shall not be allowed in the Philippines unless a
new treaty is duly concurred in by the Senate
and ratified by a majority of the votes cast by
the people in a national referendum when the
Congress so requires, and such new treaty is
recognized as such by the US Government.
Subsequently, Philcomsat installed and
established the earth station at Cubi Point and
the USDCA made use of the same.
On 16 September 1991, the Senate passed and
adopted Senate Resolution No. 141, expressing
its decision not to concur in the ratification of
the Treaty of Friendship, Cooperation and
Security and its Supplementary Agreements
that was supposed to extend the term of the
use by the US of Subic Naval Base, among
others.5
On 31 December 1991, the Philippine
Government sent a Note Verbale to the US
Government through the US Embassy, notifying
it of the Philippines termination of the RP-US
Military Bases Agreement. The Note Verbale
stated that since the RP-US Military Bases
Agreement, as amended, shall terminate on 31
December 1992, the withdrawal of all US
military forces from Subic Naval Base should be
completed by said date.
In a letter dated 06 August 1992, Globe
notified Philcomsat of its intention to
discontinue the use of the earth station
efective 08 November 1992 in view of the
withdrawal of US military personnel from Subic
Naval Base after the termination of the RP-US
Military Bases Agreement. Globe invoked as
basis for the letter of termination Section 8
(Default) of the Agreement, which provides:
Neither party shall be held liable or deemed to
be in default for any failure to perform its
obligation under this Agreement if such failure
results directly or indirectly from force
majeure or fortuitous event. Either party is
thus precluded from performing its obligation
until such force majeure or fortuitous event
shall terminate. For the purpose of this
paragraph, force majeure shall mean
circumstances beyond the control of the party
involved including, but not limited to, any law,
order, regulation, direction or request of the
Government of the Philippines, strikes or other
labor difficulties, insurrection riots, national
emergencies, war, acts of public enemies, fire,
floods, typhoons or other catastrophies or acts
of God.
Philcomsat sent a reply letter dated 10 August
1992 to Globe, stating that "we expect Globe
to know its commitment to pay the stipulated
rentals for the remaining terms of the
Agreement even after Globe shall have
discontinue the use of the earth station after
November 08, 1992."7 Philcomsat referred to
Section 7 of the Agreement saying Globe shall
continue to pay PHILCOMSAT for the rental of
the actual number of T1 circuits in use.
However, should PHILCOMSAT make use or sell
the earth station subject to this agreement, the
obligation of Globe to pay the rental for the
remaining life of the agreement shall be at
such monthly rate as may be agreed upon by
the parties.8
After the US military forces left Subic Naval
Base, Philcomsat sent Globe a letter dated 24
November 1993 demanding payment of its
outstanding obligations under the Agreement
amounting to US$4,910,136.00 plus interest
and attorneys fees. However, Globe refused to
heed Philcomsats demand.
The trial court rendered its Decision, the
dispositive portion of which ordered the
defendant to pay the plaintif the amount of
Ninety Two Thousand Two Hundred Thirty Eight
US Dollars (US$92,238.00
The appellate court ruled that the non-
ratification by the Senate of the Treaty of
Friendship, Cooperation and Security, and its
Supplementary Agreements, and the
termination by the Philippine Government of
the RP-US Military Bases Agreement efective
31 December . However, the Court of Appeals
ruled that although Globe sought to terminate
Philcomsats services by 08 November 1992, it
is still liable to pay rentals for the December
1992, amounting to US$92,238.00 plus
interest, considering that the US military forces
and personnel completely withdrew from Cubi
Point only on 31 December 1992.
(1)Whether the termination of the RP-US
Military Bases Agreement, the non-ratification
of the Treaty of Friendship, Cooperation and
Security, and the consequent withdrawal of US
military forces and personnel from Cubi Point
constitute force majeure which would exempt
Globe from complying with its obligation to pay
rentals under its Agreement with Philcomsat;
(2) whether Globe is liable to pay rentals under
the Agreement for the month of December
1992; and (3) whether Philcomsat is entitled to
attorneys fees and exemplary damages.
Whether or not Section 8 of the Agreement
cannot be given efect because the
enumeration of events constituting force
majeure therein unduly expands the concept of
a fortuitous event under Article 1174 of the
Civil Code and is therefore invalid.
RULING:
Article 1174, which exempts an obligor
from liability on account of fortuitous
events or force majeure, refers not only
to events that are unforeseeable, but also
to those which are foreseeable, but
inevitable:
Art. 1174. Except in cases specified by
the law, or when it is otherwise declared
by stipulation, or when the nature of the
obligation requires the assumption of
risk, no person shall be responsible for
those events which, could not be
foreseen, or which, though foreseen were
inevitable.
A fortuitous event under Article 1174 may
either be an "act of God," or natural
occurrences such as floods or
typhoons,24 or an "act of man," such as
riots, strikes or wars.25
Philcomsat and Globe agreed in Section 8 of
the Agreement that the following events shall
be deemed events constituting force majeure:
1. Any law, order, regulation, direction
or request of the Philippine
Government;2. Strikes or other labor
difficulties;3. Insurrection;4. Riots; 5.
National emergencies;6. War;7. Acts
of public enemies;8. Fire, floods,
typhoons or other catastrophies or
acts of God;9. Other circumstances
beyond the control of the parties.
Clearly, the foregoing are either
unforeseeable, or foreseeable but beyond
the control of the parties. There is
nothing in the enumeration that runs
contrary to, or expands, the concept of a
fortuitous event under Article 1174.
Furthermore, under Article 130626 of the Civil
Code, parties to a contract may establish such
stipulations, clauses, terms and conditions as
they may deem fit, as long as the same do not
run counter to the law, morals, good customs,
public order or public policy.27
Article 1159 of the Civil Code also provides that
"obligations arising from contracts have the
force of law between the contracting parties
and should be complied with in good
faith."28 Courts cannot stipulate for the parties
nor amend their agreement where the same
does not contravene law, morals, good
customs, public order or public policy, for to do
so would be to alter the real intent of the
parties, and would run contrary to the function
of the courts to give force and efect thereto. 29
Not being contrary to law, morals, good
customs, public order, or public policy, Section
8 of the Agreement which Philcomsat and
Globe freely agreed upon has the force of law
between them.30
In order that Globe may be exempt from non-
compliance with its obligation to pay rentals
under Section 8, the concurrence of the
following elements must be established: (1) the
event must be independent of the human will;
(2) the occurrence must render it impossible
for the debtor to fulfill the obligation in a
normal manner; and (3) the obligor must be
free of participation in, or aggravation of, the
injury to the creditor.31
1.Philcomsat and Globe had no control over the
non-renewal of the term of the RP-US Military
Bases Agreement when the same expired in
1991, because the prerogative to ratify the
treaty extending the life thereof belonged to
the Senate. Neither did the parties have control
over the subsequent withdrawal of the US
military forces and personnel from Cubi Point in
December 1992:
2.Moreover, it would be unjust to require Globe
to continue paying rentals even though
Philcomsat cannot be compelled to perform its
corresponding obligation under the
Agreement.PHILCOMSAT would like to charge
GLOBE rentals for the balance of the lease term
without there being any corresponding
telecommunications service subject of the
lease. It will be grossly unfair and iniquitous to
hold GLOBE liable for lease charges for a
service that was not and could not have been
rendered due to an act of the government
which was clearly beyond GLOBEs control. The
binding efect of a contract on both parties is
based on the principle that the obligations
arising from contracts have the force of law
between the contracting parties, and there
must be mutuality between them based
essentially on their equality under which it is
repugnant to have one party bound by the
contract while leaving the other party free
therefrom.