Republic v PLDT

Facts:
PLDT and RCA Communications, an American company authorized to transact business in the Phils,
entered into an agreement whereby tel. msgs coming from the ! and recei"ed by RCA#s domestic
station could automatically be transferred to PLDT and "ice "ersa
Contracting parties agreed to di"ide tolls as follows$ %&' to PLDT, (&' to RCA
Contract contained a stipulation that either party could terminate the contract w)in a *+,month notice.
PLDT then ga"e notice to RCA to terminate the contract.
!oon after its creation in -.+(, /ureau of Telecommunications, a branch of go", rented trun0 lines of
PLDT to enable go" offices to call pri"ate parties. Their agreement stated that public use of the
ser"ice would be prohibited.
/1T then entered into an agreement w) RCA for a ser"ice where /1T would con"ey radio,telephone
calls recei"ed by RCA#s station to and from local residents.
PLDT complained that /1T "iolated the conditions of the agreement, by pro"iding ser"ices not only to
go"ernment officers but also to the public and pri"ate persons, competing with the business of PLDT.
2t ga"e notice that it would ser"er tel connections if "iolations were not stopped. 3hen it recei"ed no
reply, PLDT disconnected trun0 lines, resulting in the isolation of the Phils in telephone ser"ices from
the rest of the world, sa"e the !.
Republic filed a complaint against PLDT to restrain se"erance of tel connections
Issue: 3)n PLDT could be compelled to enter into a contract with Republic
Held/ Ratio: 4o, PLDT cannot be compelled. /ut go" can e5ercise power of eminent domain.
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 Freedom to stipulate such terms and
conditions is of the essence of our contractual s!stem" and b! e#press provision of the
statute" a contract ma! be annulled if tainted b! violence" intimidation" or undue influence
$%rticles &'()" &'')" &''*" +ivil +ode of the Philippines,
613787R, while the Republic may not compel the PLDT to celebrate a contract with it, the Republic
may, in the e5ercise of the so"ereign power of eminent domain, re9uire the telephone company to
permit interconnection of the go"ernment telephone system and that of the PLDT, as the needs of the
go"ernment ser"ice may re9uire, sub:ect to the payment of :ust compensation to be determined by
the court.
Sanchez, Marie Yasmin | Article 1306 | Civil Law Review