Republic of the Philippines v. PLDT

G.R. No. L-18841
January 27, 1969

Facts

Parties

• Plaintiff is a political entity exercising governmental powers through its branches and instrumentalities including the Bureau of Telecommunications.
• Defendant is public service corporation holding a legislative franchise to install, operate and maintain a telephone system throughout the Philippines and to carry on the business of electrical transmission of messages within the Philippines and between the Philippines and the telephone systems of other countries.

Antecedent facts

• PLDT entered into a contract with RCA Communications Inc hereby telephone messages, coming from the United States and received by RCA’s domestic station, could automatically be transferred to the lines of PLDT; and vice-versa
• Bureau of Telecommunications set up its own Government Telephone System by utilizing its own appropriation and equipment and by renting trunk lines of the PLDT to enable government offices to call private parties
• Plaintiff, through the Director of Telecommunications, entered into an agreement with RCA Communications, Inc for a joint overseas telephone service
• PLDT complained the plaintiff is violating the conditions under of the contract between the Bureau of Telecommunications and PLDT Bureau had used the trunk lines not only for the use of government offices but even to serve private persons or the general public, in competition with the business of the PLDT
• PLDT gave notice that if the violations were not stopped, it would sever the telephone communications.
• The notice received no reply so the PLDT disconnected the trunk lines being rented by the Bureau of Telecommunications.
• As a result, the Philippines have been isolated from the rest of the world except US.
• The Bureau had proposed an interconnecting agreement that it will pay for all calls passing through the interconnecting facilities from the Government Telephone System to the PLDT. On the other hand, the PLDT is willing to enter into said agreement provided that the Bureau will submit to the jurisdiction ad regulation of the Public Service Commission and to the profit-sharing terms. The proposals were not accepted by either party.
• Hence, plaintiff instituted a suit praying in its complaint for judgement commanding the PLDT to execute a contract for the use of the facilities of the PLDT and for a writ of injunction against the defendant’s company to restrain the severance of the existing telephone connections.

Procedural Posture

• The CFI Manila granted the petition of the plaintiff.
• On appeal, the lower court granted rendered judgment that it could not compel the PLDT to enter into an agreement with the Bureau because the parties were not in agreement but it however granted the writ of injunction as permanent.
• Hence, this appeal by the Republic, contesting why the court cannot compel the defendant to enter into an agreement with plaintiff.

Issue

Whether or not the Republic can compel PLDT to permit interconnection of the government telephone system and that of PLDT as a valid exercise of its right to eminent domain?

Held

Yes. Power of eminent domain results in the taking or appropriation of title to, and possession of, the expropriated property. Real property may, through expropriation, be subjected to an easement of right of way. Under Section 6, Article XIII, of the Constitution, the State may, in the interest of national welfare, transfer utilities to public ownership upon payment of just compensation.

In this case, 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. It is unquestionable that the real property may, through expropriation, be subjected to an easement of right of way. The use of the PLDT’s lines and services to allow inter-service connection between both telephone systems is not much different. In either case private property is subjected to a burden for public use and benefit.