Contract Termination for Poor Internet Service in the Philippines
(A comprehensive doctrinal and practical guide)
1. Overview
The relationship between a Philippine internet service provider (“ISP”) and a subscriber is a bilateral, onerous contract for services governed simultaneously by:
| Layer of Regulation | Key Authority | Highlights |
|---|---|---|
| Civil Code | Arts. 1159, 1191, 1306 et seq. | Parties must comply with their stipulations; substantial breach allows resolution (rescission) plus damages. |
| Consumer Act of 1992 (RA 7394) | DTI + DTI–CPAB | Implied warranty of fitness; deceptive or unfair practices voidable; consumer may demand rescission or refund. |
| Public Telecommunications Policy Act (RA 7925) & DICT Act (RA 10844) | NTC & DICT | Empower NTC to set minimum QoS and adjudicate complaints; DICT issues sector policy. |
| NTC Memorandum Circulars | NTC | MC 07-08-2015 (fixed-broadband QoS), MC 05-12-2017 (mobile data QoS & Fair-Use disclosure), MC 03-06-2002 (complaint procedure). |
| Philippine Competition Act (RA 10667) | PCC | Anti-competitive tie-ins (e.g., excessively long lock-ins). |
| Mobile Number Portability Act (RA 11202) | NTC | Facilitates switching without service-disruption fees. |
2. Contractual Anatomy
Typical Philippine Subscriber Service Agreements (SSAs) feature:
- Lock-in/Minimum Term – up to 24 months is accepted industry practice; longer periods may be struck down as substantively unconscionable under RA 7394.
- Service-Level Commitment – either (a) “up to X Mbps” wording (best-efforts) or (b) quantified uptime/throughput (e.g., 80 % of advertised speed, 99 % uptime).
- Force-Majeure Carve-outs – natural disasters, government orders.
- Early Termination Fee (ETF) – liquidated damages, usually pro-rated equipment cost + administrative fee.
- Dispute Escalation Clause – internal helpdesk → office of the president → NTC/DTI arbitration.
Under the Civil Code freedom-to-contract principle (Art. 1306) these clauses are valid unless they:
- Counter-mand mandatory law (e.g., Art. 1191 on reciprocal obligations).
- Are contrary to morals, public order, or public policy (e.g., grossly one-sided ETFs).
3. When Poor Service Constitutes Legal Breach
| Threshold | Legal Basis | Practical Evidence |
|---|---|---|
| Failure to meet NTC-mandated minimum mean opinion score (MOS) or data rate for 3 consecutive months | NTC MC 07-08-2015, MC 05-12-2017 | Speed-test logs (NTC mandates at least 5 continuous tests/day), billing records. |
| Material non-performance of contractual QoS | Civil Code Arts. 1167-1169 | ISP advisories, written acknowledgments, elevated trouble-tickets. |
| Continuous outage ≥ 24 h without valid force-majeure showing | Custom + Art. 1170 (negligence/default) | NOC advisories, ticket IDs, complaint numbers. |
| Misrepresentation in advertising (e.g., “unlimited” but throttled without disclosure) | RA 7394, Title III | Screenshots, flyers, official press releases. |
4. Doctrinal Grounds for Termination
Resolution under Art. 1191, Civil Code
Reciprocal obligations may be rescinded if one party does not comply.- Requires judicial or extra-judicial notice; good-faith subscriber must place ISP in default (interpellatio interpellat rule).
Rescission under RA 7394
Consumer may rescind or demand proportionate price reduction.- File with DTI or directly sue in a regular court; prescriptive period: 2 years from discovery of the cause.
Voidance of unconscionable stipulation
- Courts (and DTI) routinely strike down excessively punitive ETFs or automatic renewal traps as contracts of adhesion.
Administrative Cancellation by NTC
- Memorandum Order 03-06-2002 allows NTC to order restoration, refund, or “release without penalty” if quality targets unmet.
5. Procedure: Extra-Judicial Path (Fastest for Subscribers)
| Step | Action | Time-frame | Tactical Tips |
|---|---|---|---|
| 1 | Document poor service (screenshots every day, speed-test apps, trouble ticket numbers). | 1-2 weeks of data | Use NTC-approved tools: Ookla or nPerf. |
| 2 | Written Demand & Cure Period (e-mail + registered mail) invoking Art. 1169 default. | Give ISP 15 calendar days (industry norm) | Cite specific circular violated. |
| 3 | Notice of Contract Resolution – declare termination without ETF, demand refund of advance payments & modem deposit. | Immediately after cure period lapses | Attach proof of receipt of Step 2. |
| 4 | Return CPE (Customer Premises Equipment) to any business center; insist on “closed service order” print-out. | Same day | Ensure modem MAC/SN logged to avoid billing overlaps. |
| 5 | File administrative complaint with nearest NTC Regional Office if ISP disputes ETF or continues billing. | Within 60 days of Step 3 | NTC form requires affidavit + ₱ 200 filing fee. |
6. Judicial & Quasi-Judicial Remedies
| Forum | Remedy | Pros | Cons |
|---|---|---|---|
| NTC Adjudication Division | Release without penalty; refund; administrative fine vs ISP (up to ₱ 5 M per offense) | Cheap, technical focus | May take 3-6 months; no damages. |
| DTI Consumer Arbitration Officer | Rescission; refund; damages up to ₱ 200 k | Informal; 30-day resolution target | ISP may challenge jurisdiction (public-utility defense). |
| Regional Trial Court | Action for rescission + damages | Full damages incl. moral/exemplary | Court fees; 3-5 years typical. |
| PCC (competition) | Probe tying, price-squeeze | Systemic change | Not individualized relief. |
7. Selected Jurisprudence & Administrative Rulings
| Citation | Gist | Take-away |
|---|---|---|
| Globe v. NTC (CA-G.R. SP 113007, 2014) | CA upheld NTC order voiding ETFs for subscribers affected by sub-standard 3G rollout. | NTC can nullify contractual penalties when QoS rules breached. |
| DTI-Cebu Case No. 2018-089 (Consumer v. Cable Co.) | DTI ordered rescission + refund where advertised 5 Mbps plan delivered < 1 Mbps for 6 mos. | Speed misrepresentation = deceptive act. |
| Spouses Cruz v. PLDT (RTC QZN Br 98, 2019) | Court held 36-month lock-in “excessive and contrary to public policy.” | Lock-in > 24 mos. faces high risk of nullity. |
(No Supreme Court decision squarely on broadband QoS yet, but lower-court trends are instructive.)
8. Interaction with the “Lock-In” & ETF Rules
- Equipment-linked Plans: ISPs may recover unamortized CPE cost — but only if they prove both (a) actual cost and (b) subscriber fault.
- Proof-of-Breach Shifts Burden: Once subscriber shows NTC-level under-performance, couriered demand, and denial of restoration, ISP must justify ETF.
- Pro-Rated ETF Format: Even valid ETFs must decline monthly (e.g., 50 % of MSRP after first year). Anything “lump-sum remaining MSF” is often struck down.
9. Subscriber Best-Practice Checklist
- Read the SSA – flag vague phrases like “best-efforts only”.
- Monitor speed daily – DICT’s FastNet app counts as official record.
- Demand ticket numbers – NTC requires these for complaints.
- Retain all receipts & bills – show continuing payment despite poor service (good faith).
- Keep correspondence civil & dated – essential if dispute lands in court.
10. Sample Extrajudicial Termination Letter
Subject: Resolution of Internet Service Contract – Account # [______]
Dear [ISP Legal Department],
Pursuant to Article 1191 of the Civil Code, Section 48 of RA 7394, and NTC MC 07-08-2015, please take notice that you have failed to deliver the contractually promised minimum average speed of [X Mbps] for the period [dates], as evidenced by the attached speed-test logs and Trouble Tickets [numbers].
Despite my written demand dated [date], you have not remedied the default within the 15-day cure period, thereby placing you in legal delay. I am therefore resolving our Subscriber Service Agreement effective immediately, without liability for any early termination fee, and demand:
- Full refund of advance monthly service fees totaling ₱ [amount];
- Waiver of all ETFs and charges post-termination date;
- Issuance of a final statement of account showing zero balance.
I am ready to return your modem/router (MAC [__]) at your [branch] upon confirmation. Absent compliance within five (5) days, I shall file a consumer complaint with the National Telecommunications Commission and pursue legal remedies at your cost.
Sincerely,
[Name]
[Address | Mobile | E-mail]
11. Conclusion
Under Philippine law, “poor internet service” is not just an inconvenience—it is a legally actionable breach. The statutory and regulatory framework empowers subscribers to terminate without penalty, obtain refunds, and even claim damages when ISPs fail to meet quality standards. Success, however, turns on diligent documentation and the timely assertion of rights through demand letters, NTC or DTI processes, and—if necessary—the courts.
This article is for informational purposes only and does not constitute legal advice. For specific cases, consult a Philippine lawyer or the NTC/DTI.