ON LOSS:

I. Complete Case Title: NAGA TELEPHONE CO., INC. (NATELCO) AND

LUCIANO M. MAGGAY, Petitioners
Vs.
THE COURT OF APPEALS AND CAMRINES SUR II
ELECTRIC COOPERATIVE, INC. (CASURECO II),
Respondents.
Docket Number: G.R. No. 107112
Date: February 24, 1994

II. Facts:
 NATELCO, a telephone company entered into a contract with
Camarines Sur II Electric Cooperative Inc. (CASURECO II) on November
1, 1977, for the use in operation of its telephone service the electric light
posts of CASURECO II in Naga City.
 In return, 10 telephone connections for the use of CASURECO II were
installed, free of charge, as long as NATELCO needs electric light posts.
The contract being understood shall terminate when it is forced to stop,
abandoned its operation, and becomes necessary to remove the
electric light posts.
 After 10 years, CASURECO II filed against NATELCO for reformation of the
contract with damages; that it is not in conformity with the guidelines of
National Electrification Administration of a reasonable compensation for
the use of the posts.
 Natelco used 319 posts amounting to P267,960.00 and refused to pay
despite demands.
 CASURECO II complained about the poor servicing by NETALCO which
cause great inconvenience and damages to the tune, not less than
P100,000.00.
 NATELCO averred that it should be dismiss because it does not state a
cause of action for reformation, barred by prescription, and it is barred
by estoppel. They also alleged that if there was inequity, it was suffered
by them.
 NATELCO claimed that CASURECO II asked for telephone lines outside
Naga City, which its posts were used by CASURECO II, and what is due
to NATELCO is more than its claim against them.
 NATELCO claimed that their telephone service was categorized by NTC
as “very high” and of “superior quality”.

III. Issue/s:
 Whether or not Article 1267 of the New Civil Code is applicable.
 Whether or not the filing of reformation has prescribed.
 Whether or not the contract was subject to a potestative Period in favor
of NATELCO.

IV. Ruling/s:
 Inorder not to distrupt the basic and essential services rendered by both parties to
the public and to avoid unjust enrichment by NATELCO at the expense of CASURECO
II. NATELCO must pay CASURECO II for the use of electric light posts in Naga City,
with a monthly rental of P10.00/post from January 1989, while CASURECO II should
 pay for the telephones at the same rate being paid by the general public from
January 1989.
 CASURECO II’s cause of action to ask for reformation should be considered to have
arisen only in 1982 or 1983, and from 1982 to January 2, 1989 when the complaint
in this case was filed, ten (10) years had not yet elapsed.
 The contract is subject to mixed conditions where they depend partly on the will of
the debtor and partly on chance, hazard or the will of a third person, which do not
invalidate the provision in the contract.

Summarized By: Amado, Rhenalyn

ON LOSS:

I. Complete Case Title: NAGA TELEPHONE CO., INC. (NATELCO) AND

LUCIANO M. MAGGAY, Petitioners
Vs.
THE COURT OF APPEALS AND CAMRINES SUR II
ELECTRIC COOPERATIVE, INC. (CASURECO II),
Respondents.
Docket Number: G.R. No. 107112
Date: February 24, 1994

II. Facts:
 NATELCO, a telephone company entered into a contract with
Camarines Sur II Electric Cooperative Inc. (CASURECO II) on November
1, 1977, for the use in operation of its telephone service the electric light
posts of CASURECO II in Naga City.
 In return, 10 telephone connections for the use of CASURECO II were
installed, free of charge, as long as NATELCO needs electric light posts.
The contract being understood shall terminate when it is forced to stop,
abandoned its operation, and becomes necessary to remove the
electric light posts.
 After 10 years, CASURECO II filed against NATELCO for reformation of the
contract with damages; that it is not in conformity with the guidelines of
National Electrification Administration of a reasonable compensation for
the use of the posts.
 Natelco used 319 posts amounting to P267,960.00 and refused to pay
despite demands.
 CASURECO II complained about the poor servicing by NETALCO which
cause great inconvenience and damages to the tune, not less than
P100,000.00.
 NATELCO averred that it should be dismiss because it does not state a
cause of action for reformation, barred by prescription, and it is barred
by estoppel. They also alleged that if there was inequity, it was suffered
by them.
 NATELCO claimed that CASURECO II asked for telephone lines outside
Naga City, which its posts were used by CASURECO II, and what is due
to NATELCO is more than its claim against them.
 NATELCO claimed that their telephone service was categorized by NTC
as “very high” and of “superior quality”.

III. Issue/s:
 Whether or not Article 1267 of the New Civil Code is applicable.
 Whether or not the filing of reformation has prescribed.
 Whether or not the contract was subject to a potestative condition in
favor of NATELCO.

IV. Ruling/s:
 Inorder not to distrupt the basic and essential services rendered by both parties to
the public and to avoid unjust enrichment by NATELCO at the expense of CASURECO
II. NATELCO must pay CASURECO II for the use of electric light posts in Naga City,
with a monthly rental of P10.00/post from January 1989, while CASURECO II should
 pay for the telephones at the same rate being paid by the general public from
January 1989.
 CASURECO II’s cause of action to ask for reformation should be considered to have
arisen only in 1982 or 1983, and from 1982 to January 2, 1989 when the complaint
in this case was filed, ten (10) years had not yet elapsed.
 The contract is subject to mixed conditions where they depend partly on the will of
the debtor and partly on chance, hazard or the will of a third person, which do not
invalidate the provision in the contract.

ADOPTED BY: Obedencia, Deejay

WITH MY CONFORMITY: Amado, Rhenalyn