Republic v. PLDT, 26 SCRA 620

123. Republic vs.
PLDT
G.R. No. L-18841 RULING: NO. Parties cannot be coerced to enter into a contract where no agreement is had
DATE: January 27, 1969 between them as to the principal terms and conditions of the contract. Freedom to stipulate
such terms and conditions is of the essence of our contractual system, and by express
Topic: Consensuality of Contracts provision of the statute, a contract may be annulled if tainted by violence, intimidation, or
Petitioner: Republic of the Philippines undue influenc. But the court a quo has apparently overlooked that while the Republic may
Respondent: Philippine Long Distance Telephone Company not compel the PLDT to celebrate a contract with it, the Republic may, in the exercise of the
Ponente: Reyes, J.B.L., J. sovereign power of eminent domain, require the telephone company to permit
interconnection of the government telephone system and that of the PLDT, as the needs of
DOCTRINE: Parties cannot be coerced to enter into a contract where no agreement is had the government service may require, subject to the payment of just compensation to be
between them as to the principal terms and conditions of the contract. determined by the court.
FACTS: In 1933, PLDT and RCA Communications entered into an agreement whereby Nominally, of course, the power of eminent domain results in the taking or appropriation of
telephone messages coming from US and received by RCA's domestic station could be title to, and possession of, the expropriated property; but no cogent reason appears why the
transferred to the lines of PLDT and vice-versa. Parties agreed to divide the tolls, as follows: said power may not be availed of to impose only a burden upon the owner of condemned
25% to PLDT and 75% to RCA. The sharing was amended in 1941 to 30-70, and again property, without loss of title and possession. It is unquestionable that real property may,
amended in 1947 to a 50-50 basis. Their contract contained a stipulation that either party through expropriation, be subjected to an easement of right of way. The use of the PLDT's
could terminate it on a 24-month notice to the other. PLDT gave notice to RCA to terminate lines and services to allow inter-service connection between both telephone systems is not
their contract on 2 February 1958. much different. In either case private property is subjected to a burden for public use and
benefit. If, under section 6, Article XIII, of the Constitution, the State may, in the interest of
In 1947, the Bureau of Telecommunications set up its own Government Telephone System. national welfare, transfer utilities to public ownership upon payment of just compensation,
Its application for the use of these trunk lines was in the usual form of applications for there is no reason why the State may not require a public utility to render services in the
telephone service. It prohibits the public use of the service furnished the telephone general interest, provided just compensation is paid therefor. Ultimately, the beneficiary of
subscriber for his private use. the interconnecting service would be the users of both telephone systems, so that the
condemnation would be for public use.
On 5 March 1958, the plaintiff entered into an agreement with RCA for a joint overseas
telephone service whereby the Bureau would convey radio-telephone overseas calls received DISPOSITIVE: WHEREFORE, the decision of the Court of First Instance, now under appeal, is
by RCA's station to and from local residents. They inaugurated this joint operation on 2 affirmed, except in so far as it dismisses the petition of the Republic of the Philippines to
February 1958, under a "provisional" agreement. compel the Philippine Long Distance Telephone Company to continue servicing the
Government telephone system upon such terms, and for a compensation, that the trial court
On 7 April 1958, PLDT complained to the Bureau that it was violating the conditions under may determine to be just, including the period elapsed from the filing of the original
which their Private Branch Exchange (PBX) is inter-connected with the PLDT's facilities, complaint or petition. And for this purpose, the records are ordered returned to the court of
referring to the rented trunk lines, for it had used the trunk lines not only for the use of origin for further hearings and other proceedings not inconsistent with this opinion.
government offices but even to serve the general public, in competition with PLDT and gave
notice that if said violations were not stopped, PLDT would sever the telephone connections.
When PLDT received no reply, it disconnected the trunk lines being rented. The result was
the isolation of the Philippines, on telephone services, from the rest of the world, except the
US.
After failure to negotiate terms, the Bureau filed a suit against defendant in the CFI of Manila
praying that PLDT be commanded to execute a contract with plaintiff for the use of the
latter’s telephone system under such terms as the court would deem just and a preliminary
injunction to prevent further severance or to restore those that had already been severed.
The lower court ruled that it could not force PLDT to enter into a contract, nor is the Bureau
not allowed to service the general public with telephone connections. Thus, this appeal.
ISSUE: Can PLDT be forced to execute a contract with petitioner?

Republic v. PLDT, 26 SCRA 620

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123. Republic vs.

ISSUE: Can PLDT be forced to execute a contract with petitioner?

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