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Republic of the Philippines

Philippine Long Distance Telephone

G.R. No. L-18841

January 27, 1969

Plaintiff, Republic of the Philippines, is a political
entity exercising governmental powers, in this case,
through its agency the Bureau of
Defendant, Philippine Long Distance Telephone
Company (PLDT), is a public service corporation
operating under a legislative franchise, engaged in
domestic and international telecommunications.

In 1947, the Bureau set up its own Government
Telephone System using its own appropriation
and equipment and by renting trunk lines of the
The rental of the PLDT equipment and was
undertaken through an agreement between the

Part of the said agreement states that the

Bureau may only use the PLDT trunk lines for
government offices and not for extending
services to the general public.

In 1948, the Bureau began providing telephone services
to the general public, using both its own trunk lines and
those rented from PLDT.nes rented by the government.

In 1958, PLDT complained to the Bureau that the agency

was violating the conditions of their agreement. The
company also gave an ultimatum that if the agency did
not stop the violations, they shall sever the telephone
After recieving no response from the Bureau, PLDT
disconnected the trunk lines rented by the government.

After not being able to amicably settle the dispute,
the Bureau filed a case against the PLDT.

The government agency prayed for the following

reliefs from the court:
That PLDT be compelled to enter into a contract
with the Bureau for the use of the
telecommunication facilities of the defendant
under such terms that the court would find
reasonable, and;
For a writ of preliminary injunction to restrain the
disconnection of the rented trunk lines and for the
restoration of said service.

The lower court, on the ground that the
severance of telephone connections isolated the
Philippines from other countries, granted the
plaintiff's petition.
Defendant, on the other hand, claimed that the
Bureau was using the rented facilities in fraud of
its rights and in excess of authority.

Whether or not the State can compel
PLDT, a private corporation, to sign a
contract to provide telecommunication
services for the government telephone

Yes. Although the Supreme Court agreed that
the parties may not be coerced to enter into a
contract where no agreement has been settles,
the high court said that the State may obligate
PLDT to permit interconnection of the
government telephone sytem and the private
company's telecommunications facilities.
In this case, the state may invoke its soveriegn
power of eminent domain.

Normally, the power of eminent domain results
in the taking or appropriation of title to, and
possession of, the expropriated property.
In this case, the SC said the State may, in the
interest of national welfare may require a public
utility to render services in the general interest,
provided just compensation is paid for.

"When private property is by the consent
of the owner invested with public interest
or privilege for the benefit of the public, the
owner can no longer deal with it as a
prvate property only, but it must hold it
subject to the right of the public in the
exercise of that public interest or privilege
conferred for their benefit."
- Supreme Court citing Mahan v.
Mich. Tel.Co., 132 Mich. 242, 93
N.W. 629