Case Digest (G.R. No. 91332)
Facts:
In Naga Telephone Co., Inc. (NATELCO) vs. Camarines Sur II Electric Cooperative, Inc. (CASURECO II), decided February 24, 1994, NATELCO and its counsel‐director Luciano M. Maggay (petitioners) sought relief from a ten‐year‐old agreement with CASURECO II (respondent) under which NATELCO was allowed to use respondent’s electric light posts in Naga City in exchange for ten free telephone connections at sites selected by CASURECO II. The contract, executed on November 1, 1977, contained a clause making its duration reliant on NATELCO’s need for the posts and respondent’s continued operation as a public service. Over more than a decade, NATELCO’s subscriber base swelled, the posts were heavily loaded, many poles were damaged in typhoons, and NATELCO extended its use to towns outside Naga City without contractual authority. In January 1989, CASURECO II filed for reformation of the agreement with damages and two additional claims: (1) unpaid use of 319 posts outside Naga City at ₱10 peCase Digest (G.R. No. 91332)
Facts:
- Contractual Agreement
- On November 1, 1977, Naga Telephone Co., Inc. (NATELCO) and Camarines Sur II Electric Cooperative, Inc. (CASURECO II) entered into a contract:
- NATELCO was granted use of CASURECO II’s electric light posts in Naga City.
- In consideration, NATELCO would install free of charge ten (10) telephone connections for CASURECO II at specified locations (main office, warehouse, sub‐station, residences of officers, plus two to be determined).
- The term was indefinite, lasting “as long as” NATELCO needed the posts, terminating only if CASURECO II ceased operations and removed the posts.
- The contract was drafted by Atty. Luciano M. Maggay, board member and counsel for both parties.
- Post‐Contract Developments and Dispute
- Over more than ten years, NATELCO’s subscriber base expanded, cables became heavier, posts deteriorated, and replacement costs rose from P700–1,000 (1977) to P1,500–2,000 (1989). NATELCO also used 319 posts outside Naga City (Pili, Canaman, Magarao, Milaor) without any new agreement.
- CASURECO II filed suit in the Regional Trial Court (Br. 28, C.C. No. 89‐1642) on January 2, 1989:
- First cause: reformation of contract (too one‐sided), plus damages, arguing NEA guidelines set P10/post/month rental.
- Second cause: recovery of P267,960 for use of 319 posts outside Naga City (P10/post/month since 1981).
- Third cause: damages (≥P100,000) for alleged poor service of the ten free telephone units.
- Trial and Lower Courts’ Findings
- NATELCO answered: first cause lacked a cause of action, was time‐barred and estopped; second cause disputed obligations; third cause asserted high‐quality service per NTC findings.
- CASURECO II witnesses testified on contract scope, increased loading, typhoon damage, NEA rental guidelines, and poor service response times. NATELCO witnesses asserted fair contract terms, minimal structural impact, and compliance with engineering standards.
- RTC (July 20, 1990) reformed contract: NATELCO to pay P10/post/month for all used posts (from Jan 2, 1989); CASURECO II to pay telephone dues at public rates (same period). Other claims were dismissed.
- CA (May 28, 1992) affirmed RTC decision but on different grounds: (a) applicability of Article 1267, New Civil Code (impracticability/difficulty); (b) the “as long as” term was a potestative condition, void. Motion for reconsideration denied (Sept 10, 1992).
- NATELCO and Maggay petitioned before the Supreme Court, assigning errors on application of Art. 1267, prescription, and validity of the potestative condition.
Issues:
- Whether Article 1267 of the New Civil Code (service so difficult beyond contemplation) applies to release or adjustment of NATELCO’s obligation.
- When CASURECO II’s cause of action accrued for purposes of the ten‐year prescription on a written contract.
- Whether the indefinite “as long as” term amounted to a purely potestative condition, thus voiding that provision.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)