Republic v.
PLDT (1969) PROVISION:
Petitioners: Republic of the Philippines
Respondents: PLDT
DOCTRINE:
Freedom to stipulate such terms and conditions is of the essence of our
contractual system, and by express provision of the statute, a contract may
be annulled if tainted by violence, intimidation, or undue influence
FACTS:
1. Sometime in 1933,PLDT entered into an agreement with RCA
Communications Inc., an American corporation, whereby telephone
messages coming from the US and received by RCAs domestic station,
could automatically be transferred to the lines of PLDT, and vice versa.
2. RP, through the Bureau of Telecommunications, after having set up its
own Government Telephone System, by utilizing its own appropriation
and equipment and by renting trunk lines of the PLDT, entered into an
agreement with RCA for a joint overseas telephone service.
3. Alleging that the government is in competition with them, PLDT notified
the former and receiving no reply, disconnected the trunk lines being
rented by the same.
4. This prompted the government to file a case before the CFI praying for
judgment commanding PLDT to execute a contract with the Bureau for
the use of the facilities of PLDTs telephone system, and for a writ of
preliminary injunction against the defendant to restrain the severance of
the existing trunk lines and restore those severed.
ISSUE: WON PLDT can be compelled to enter into a contract with the
government
Art. 1306. The contracting parties may establish such stipulations, clauses,
terms and conditions as they may deem convenient, provided they are not
contrary to law, morals, good customs, public order, or public policy
RULING + RATIO: NO, but Republic may compel an interconnection
contract with PLD through power of eminent domain.
1. Parties cannot be coerced to enter into a contract where no agreement is
had between them as to the principal terms and conditions of the
contract.
2. Freedom to stipulate such terms and conditions is of the essence of our
contractual system, and by express provision of the statute, a contract
may be annulled if tainted by violence, intimidation, or undue influence
3. While the Republic may not compel the PLDT to celebrate a contract with
it, the Republic may, in the exercise of the 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 the
government service may require, subject to the payment of just
compensation to be determined by the court.
DISPOSITION: WHEREFORE, the decision of the Court of First Instance,
now under appeal, is affirmed, except in so far as it dismisses the petition of
the Republic of the Philippines to 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 may determine
to be just, including the period elapsed from the filing of the original complaint
or petition. And for this purpose, the records are ordered returned to the court
of origin for further hearings and other proceedings not inconsistent with this
opinion. No costs.