natelco v. ca case digest

7/25/2019 NATELCO v. CA Case Digest

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Naga Telephone Co. v. CA

Art.1267: When the service has become so difficult as to be manifestly beyond the contemplation of the

parties, the obligor may also be released therefrom, in whole or in part.

Petitioner: Naga Telephone Co. (NATELCO) and Atty. Luciano Maggay

Respondent: Caarines !ur "" Electric Cooperati#e$ "nc. (CA!%RECO)

FACTS

No#e&er '$ ': NATELCO and CA!%RECO entered into a contract *or the use &y NATELCO inthe operation o* its telephone ser#ice the electric light posts o* CA!%RECO in Naga City.

NATELCO agreed to install$ *ree o* charge$ ten ('+) telephone connections *or the use &y

CA!%RECO in the *ollo,ing places:

- units- Main O**ice o* CA!%RECO

-/ %nits 0 The 1arehouse- ' %nit 0 The !u&-!tation

- ' %nit 0 The Residence o* President- ' %nit 0 The Residence o* Acting 2eneral Manager-/ %nits 0 To &e deterined &y the 2eneral Manager.

The contract also pro#ided that the term or period of this contract shall be as long as the party of the

first part has need for the electric light posts of the party of the second part it being understood that

this contract shall terminate when for any reason whatsoever, the party of the second part is forced

to stop, abandoned [sic] its operation as a public service and it becomes necessary to remove the

electric lightpost;3. The contract ,as prepared ,ith the assistance o* Atty. Luciano Maggay$ thene&er o* 4oard o* 5irectors o* CA!%RECO and at the sae tie legal counsel o* NATELCO.

A*ter the contract has &een en*orced o#er '+ years:

CA!%RECO NATELCO

!irst "ause of Action

-CA!%RECO *iled against NATELCO *orre*oration o* contract ,ith daages on the ground

that it is too one-sided in *a#or o* NATELCO

- it is not in con*ority ,ith the guidelines o*

the National Electri*ication Adinistration

(NEA) ,hich direct that the reasona&lecopensation *or the use o* the posts is P'+.++

per post$ per onth

- a*ter ele#en ('') years o* petitioners6 use o* theposts$ the telephone ca&les strung &y the

thereon ha#e &ecoe uch hea#ier ,ith the

increase in the #olue o* their su&scri&ers$

,orsened &y the *act that their lineen &ore

!irst "ause of Action"t should &e disissed &ecause:

-it does not su**iciently state a cause o* action*or re*oration o* contract

-&arred &y prescription ha#ing &een *iled ore

than '+ years a*ter e7ecution o* contract

-&arred &y estoppel since NATELCO see8s to

en*orce contract in the sae action

-that their utili9ation o* CA!%RECO6s post

could not ha#e caused deterioration &ecause theyha#e already &een in use *or '' years and that

the #alue o* their e7penses *or '+ telephone lines

long enoyed &y CA!%RECO *ree o* charge are


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holes through the posts at ,hich points those

posts ,ere &ro8en during typhoons; that a post

no, costs as uch as P/$


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the telephone lines strung to the posts ,ere #ery

light in '$ said posts ha#e &ecoe hea#ily

loaded in '>.

-Engr. Antonio Borja; declared that the posts&eing used &y petitioners totalled '$+ as o*

April '$ '>$ '/ o* ,hich ,ere in the to,ns

o* Pili$ Canaan$ and Magarao$ all outside

Naga City; that petitioners6 ca&les strung to the

posts in '> are uch &igger than those in

No#e&er$ '; that in '>$ alost '++ posts,ere destroyed &y typhoon !isang: around /+

posts ,ere located &et,een Naga City and the

to,n o* Pili ,hile the posts in &arangay

Concepcion$ Naga City ,ere &ro8en at the

iddle ,hich had &een &ored &y petitioner6s

lineen to ena&le the to string &igger

telephone lines; that ,hile the cost per post in' ,as only *ro P++.++ to P'$+++.++$ their

costs in '> ,ent up *ro P'$B++.++ to

P/$+++.++$ depending on the si9e; that soe

lines that ,ere strung to the posts did not *ollo,

the iniu #ertical clearance re=uired &y theNational 4uilding Code$ so that there ,ere

cases in '>> ,here$ &ecause o* lo, clearance

o* ca&les$ passing truc8s ,ould accidentally

touch said ca&les causing posts to *all and

resulting in &ro,n-outs until electric lines ,ererepaired.

!irst "ause of Action

(a) CA!%RECO has the right under the

contract to use ten ('+) telephone units o*NATELCO *or as long as it ,ishes ,ithout

paying anything there*or e7cept *or long

distance calls through PL5T out o* ,hichthe latter get only '+ o* the charges.LLpr

(&) "n ost cases$ only drop ,ires and not

telephone ca&les ha#e &een strung to the

posts$ ,hich posts ha#e reained erect up topresent;

(c) NATELCO6s lineen ha#e strung onlysall essenger ,ires to any o* the posts

and they need only sall holes to pass

through; and

(d) 5ocuents e7isting in the NTC sho,

that the stringing o* NATELCO6s ca&les in

Naga City are according to standard and

copara&le to those o* PL5T. The accidents

entioned &y CA!%RECO in#ol#ed truc8s

that ,ere either o#erloaded or had loads that

protruded up,ards$ causing the to hit theca&les.

-Dario Bernardezdeclared that according to

NEA guidelines in '>B (E7h. 3C3)$ *or the use

&y pri#ate telephone systes o* electric

cooperati#es6 posts$ they should pay a iniu

onthly rental o* P.++ per post$ and

considering the escalation o* prices since '>B$

electric cooperati#es ha#e &een charging *ro

P'+.++ to P'B.++ per post$ ,hich is ,hatpetitioners should pay *or the use o* the posts.

#econd "ause of Action

the intention o* the parties ,hen they

entered into the contract ,as that theco#erage thereo* ,ould include the ,hole

area ser#iced &y NATELCO &ecause at that

tie$ they already had su&scri&ers outside

Naga City. CA!%RECO$ in *act$ had as8ed*or telephone connections outside Naga City

*or its o**icers and eployees residing therein addition to the ten ('+) telephone units

entioned in the contract. NATELCO ha#e

not &een charging CA!%RECO *or the

installation$ trans*ers and re-connections o*

said telephones so that naturally$ they use


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the posts *or those telephone lines.

-Engr. Antonio Macandog testi*ied on the poor

ser#ice rendered &y petitioners6 telephone lines$

li8e the telephone in their Coplaints !ection

,hich ,as usually out o* order such that they

could not respond to the calls o* theircustoers. "n case o* disruption o* their

telephone lines$ it ,ould ta8e t,o to three hours*or petitioners to reacti#ate the

not,ithstanding their calls on the eergency

line.

$hird "ause of Action

NTC has *ound NATELCODs ca&le

installations to &e in accordance ,ith

engineering standards and practice andcopara&le to the &est in the country.

-Atty. !is "eneral# $r.testi*ied that the 4oard

o* 5irectors as8ed hi to study the contract

soetie during the latter part o* '>/ or in

'>$ as it had appeared #ery disad#antageous

to pri#ate respondent. Not,ithstanding hisrecoendation *or the *iling o* a court action

to re*or the contract$ the *orer general

anagers o* pri#ate respondent ,anted to adopt

a so*t approach ,ith petitioners a&out the atter

until the ter o* 2eneral Manager enryPascual ,ho$ a*ter *ailing to settle the atter

aica&ly ,ith petitioners$ *inally agreed *or hi

to *ile the present action *or re*oration o*

contract.

RTC%

First Cause of Action: ,hile the contract appeared to &e *air to &oth parties ,hen it ,as entered

into &y the during the *irst year o* pri#ate respondentDs operation and ,hen its 4oard o*

5irectors did not yet ha#e any e7perience in that &usiness$ it had &ecoe disad#antageous and

un*air to pri#ate respondent &ecause o* su&se=uent e#ents and conditions$ particularly the

increase in the #olue o* the su&scri&ers o* petitioners *or ore than ten ('+) years ,ithout the

corresponding increase in the nu&er o* telephone connections to pri#ate respondent *ree o*

charge.

Conclusion- ,hile in an action *or re*oration o* contract$ it cannot a8e another contract *or

the parties$ it can$ ho,e#er$ *or reasons o* ustice and e=uity$ order that the contract &e

re*ored to a&olish the ine=uities therein. Thus$ said court ruled that the contract should &e

re*ored &y ordering petitioners to pay pri#ate respondent copensation *or the use o* their

posts in Naga City$ ,hile pri#ate respondent should also &e ordered to pay the onthly &ills *or

the use o* the telephones also in Naga City.


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And ta8ing into consideration the guidelines o* the NEA on the rental o* posts &y telephonecopanies and the increase in the costs o* such posts$ RTC opined that a onthly rental o*

P'+.++ *or each post o* CA!%RECO used &y NATELCO is reasona&le$ ,hich rental it should

pay *ro the *iling o* the coplaint in the case and in li8e anner$ CA!%RECO should pay

NATELCO *ro the sae date its onthly &ills *or the use and trans*ers o* its telephones in

Naga City at the sae rate pu&lic are paying.

Second Cause of Action:

the contract does not ention anything a&out the use &y NATELCO o* CA!%RECO6s posts outsideNaga City. There*ore$ the trial court held that *or reason o* e=uity$ the contract should &e re*ored &y

including therein the pro#ision that *or the use o* CA!%RECO6s posts outside Naga City$ NATELCO

should pay a onthly rental o* P'+.++ per postpayent to start on the date this case ,as *iled$ or

on Fanuary /$ '>$ and CA!%RECO should also pay NATELCO the onthly dues on its

telephone connections located outside Naga City &eginning Fanuary$ '>.

hird Cause of Action:

RTC *inds the clai not su**iciently pro#en.

S!&&ary o' RTC R!ling%

decision is here&y rendered ordering the re*oration o* the agreeent (E7h. A);

ordering the de*endants to pay plainti**6s electric poles in Naga City and in the to,ns

o* Milaor$ Canaan$ Maragao and Pili$ Caarines !ur and in other places ,herede*endant NATELCO uses plainti**6s electric poles$ the su o* TEN (P'+.++) PE!O!

per plainti**6s pole$ per onth and ordering also the plainti** to pay de*endant

NATELCO the onthly dues o* all its telephones including those installed at the

residence o* its o**icers. Plainti**6s clai *or attorney6s *ees and e7penses o* litigationand de*endants6 counterclai are &oth here&y ordered disissed.

5isagreeing ,ith the udgent o* RTC$ NATELCO appealed to CA CA ho,e#er a**ired RTC

decision &ut &ased on di**erent grounds:

(') that Article '/


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-1hether or not CAin ruling that prescription o* the action *or re*oration o* the contract in thiscase coenced *ro the tie it &ecae disad#antageous to pri#ate respondent;

-1hether or not in ruling the contract ,as su&ect to a potestati#e condition

*ED

1. ARTICLE 1267, EVEN THOUGH NEVER RAISED BEFORE, IS APPLICABLE.

a. ARTICLE 1267: Art. '/


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. Art%# 1133: At%on '+on a !r%tt#n ontrat 0'"t # ro'*/t !%t/%n 14 #ar"

(ro0 t/# t%0# t/# r%*/t o( at%on ar'#".

%. ?From the time the right of action accrues not n##""ar% t/# &at# o(

#5#'t%on o( t/# ontrat.

%%. A" orr#t r'#& r#"+onnt o'rt, +r%)at# r#"+onnt" r%*/t o(

at%on aro"# "o0#t%0# &'r%n* t/# att#r +art o( 1892 or %n 189 !/#n

aor&%n* to Att. L'%" G#n#ra, ;r. . . ., /# !a" a" Boar& o( D%r#tor" to "t'& "a%& ontrat a" %t ar#a&

a++#ar#& &%"a&)anta*#o'" to =+r%)at# r#"+onnt> %n 1898.

%%%. 14 #ar" /a& not #t #a+"#&.

*n the issue of prescription of "A#'()"*5s action for reformation of contract, +A$)"* allege

that respondent court5s ruling that the right of action arose only after said contract had alreadybecome disadvantageous and unfair to it due to subse-uent events and conditions is erroneous. &n

reformation of contracts, what is reformed is not the contract itself, but the instrumentembodying the contract. &t follows that whether the contract is disadvantageous or not

irrelevant to reformation and therefore, cannot be an element in the determination of the

period for prescription of the action to reform.

Article 11 of the +ew "ivil "ode provides, inter alia, that an action upon a written contract

must be brought within ten 189 years from the time the right of the action accrues. "learly,

the ten 189 year period is to be rec%oned from the time the right of action accrues which is

not necessarily the date of e0ecution of the contract. As correctly ruled by respondent court,"A#'()"*5s right of action arose sometime during the latter part of 1;2 or in 1;< when

according to Atty. uis =eneral, >r. . . ., he was as%ed by "A#'()"*5s9 oard of ?irectors

to study said contract as it already appeared disadvantageous to private respondent9.

@rivate respondent5s9 cause of action to as% for reformation of said contract should thus be

considered to have arisen only in 1;2 or 1;anuary 2, 1; when the

complaint in this case was filed, ten 189 years had not yet elapsed.

. PERIOD OF CONTRACT IS POTESTATIVE, THUS INVALID.

a. L#a)#" t/# ont%n'#& #((#t%)%t o( t/# a(or#"a%& a*r##0#nt to t/# att#r" "o#

an& #5'"%)# !% a" on* a" +a%nt%(( %" %n o+#rat%on

. L#a)#" #a)#" t/# #((#t%)%t an& #n?o0#nt o( #a"#/o& r%*/t" to t/# "o# an&

#5'"%)# !% o( t/# #""##.

@etitioners5 allegations must be upheld in this regard. A potestative condition is a condition,

the fulfillment of which depends upon the sole will of the debtor, in which case, the conditional


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obligation is void. 1 ased on this definition, respondent court5s finding that the provision inthe contract, to wit:

a9 $hat the term or period of this contract shall be as long as the party of the first

part petitioner9 has need for the electric light posts of the party of the second part

private respondent9 . . .ur

is a potestative condition, is correct. owever, it must have overloo%ed the other conditionsin the same provision, to wit:

. . . it being understood that this contract shall terminate when for any reason

whatsoever, the party of the second part private respondent9 is forced to stop,abandoned sic9 its operation as a public service and it becomes necessary to remove

the electric light post sic9/

which are casual conditions since they depend on chance, ha3ard, or the will of a third

person. 28 &n sum, the contract is subect to mi0ed conditions, that is, they depend partly on

the will of the debtor and partly on chance, ha3ard or the will of a third person, which do

not invalidate the aforementioned provision.

F(NA D(S+,S(T(-E +,RT(,N: Petition is here&y denied. 5ecision o* CA and its

resolution are AGG"RME5.

(" hope na&asa ni ninyo despite sa 8a-late na8o pag post T.T)

natelco v. ca case digest

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