Terminating an Internet Contract Without Penalty for Poor Service (Philippine Context)

This is a practical, law-informed guide for consumers and small businesses in the Philippines. It is not a substitute for legal advice.

1) Big picture

You can cancel an internet plan without paying a pre-termination fee when the provider materially fails to deliver what you paid for and you’ve given reasonable notice and a chance to fix it. Philippine law and regulation protect you through:

Civil Code (reciprocal obligations): you may cancel (resolve) a contract when the other party commits a substantial breach (Art. 1191), and courts may reduce or strike down unconscionable penalties (e.g., liquidated damages / pre-termination fees) when iniquitous (Art. 1229; see also Art. 2227 on liquidated damages).
Consumer Act (RA 7394): bans deceptive, unfair, and unconscionable sales practices and gives the right to redress (repairs, refunds, rescission, damages) when goods/services don’t match representations.
Telecoms law & regulation (RA 7925 and NTC rules): ISPs are public telecommunications entities with service-quality obligations. Chronic poor service and long outages typically warrant rebates, contract re-work, or penalty-free termination after due process.
Contract law basics: ISP service agreements are contracts of adhesion—valid, but ambiguous or oppressive terms are construed against the drafter. Clauses that waive all liability for non-delivery or impose punitive pre-termination fees despite sustained poor service are vulnerable.

2) What counts as “poor service” (practical standard)

Any of the following—persistent (not one-off) and well-documented—usually qualifies:

Repeated or prolonged outages (e.g., downtimes adding up to days in a month).
Sustained substandard speeds/latency far below plan commitments, especially at normal hours.
Unresolved trouble tickets or missed restoration/installation commitments despite follow-ups.
Non-feasibility at your address (provider admits it cannot reliably serve the area / chronic congestion).
Unilateral material changes (e.g., price increases, downgrades, caps) you didn’t agree to—if you promptly object.
Misrepresentations that induced you to sign (e.g., “fiber available in your exact building” but it was not).

Force majeure (typhoons, earthquakes, backbone cuts) can excuse short-term failures, but recurring congestion, capacity shortfalls, and neglected repairs are not force majeure.

3) Your legal bases—how they work for you

Resolution for breach (Civil Code Art. 1191) Internet service is a reciprocal obligation: you pay; they deliver service. If they materially breach, you may cancel and seek damages. In practice: give written notice, describe the breach, and set a reasonable cure period (e.g., 10–15 days). Failure to cure → you rescind/terminate for cause.
Unconscionable penalties (Civil Code Art. 1229 / 2227) A pre-termination fee is typically a liquidated damages clause. Courts can reduce/void it if iniquitous—for example, charging the entire remaining months despite chronic non-delivery, or stacking ETF + device charges + “admin fees” that exceed any real loss.
Consumer Act (RA 7394) Prohibits deceptive claims (e.g., “up to 300 Mbps” paired with fine-print that makes 10 Mbps acceptable) and unfair or unconscionable terms. Remedies include rescission (cancellation) and refunds.
Telecoms framework (RA 7925; NTC authority) The NTC sets/implements service-performance rules and handles consumer complaints. Rebates for long outages and waiver of ETFs when service is persistently deficient are standard outcomes after NTC mediation, provided you have solid documentation and proof of unresolved trouble tickets.

4) Evidence that wins cases (and escalations)

Keep a tidy dossier:

Service logs: a simple spreadsheet listing date, time, issue, outage duration, ticket/ref no., ISP response.
Speed/latency tests: at least 3–5 tests/day over 7–14 days, on wired if possible; include screenshots (showing timestamp, server, results).
Outage timeline: list dates & durations; include photos of modem lights, NOC advisories, SMS alerts.
Correspondence: emails, chat transcripts, and official ticket numbers; note missed technician appointments.
Billing: copies showing you paid on time; highlight months you request rebates for.

5) Step-by-step: terminate without penalty

Diagnose & document (1–2 weeks). Build the evidence above.
Written “notice to cure” to the ISP (email + registered mail to the address in the contract).
- Cite persistent poor service, attach your logs, and give a reasonable cure period (e.g., 10–15 days).
Follow-up: allow access for repairs; keep new ticket numbers.
Terminate for cause (after cure period lapses or failures continue).
- Send a “Resolution/Rescission” letter (see template) demanding waiver of ETFs, rebates for downtime, and final bill limited to: (a) charges up to your termination date net of rebates, and (b) return of any loaned modem/ONT to avoid device fees.
Escalate if needed
- NTC complaint (regional office or central) with your dossier; ask for ETF waiver and rebates.
- If there was misrepresentation or unconscionable sales practice, you may also complain under the Consumer Act.
Close-out
- Get a Receipt/Certificate of Return for the modem/ONT.
- Obtain written confirmation that ETF is waived and account is closed with zero balance (or an exact final balance).
- If billed after termination, dispute in writing; copy the NTC on the follow-up.

6) Special scenarios

Device subsidies & lock-ins: If your plan included a subsidized device, providers often try to recover its depreciated cost. When you terminate for cause (their breach), argue no device charge or at least a fair, prorated amount—return the device promptly to eliminate dispute.
Relocation: Moving to a non-serviceable area is commonly treated as penalty-free (verify terms). If the ISP can’t serve the new address within a reasonable time, you can press for waiver.
Business/SME plans: Check for SLAs. Chronic SLA breaches strengthen your claim; invoke service credits and termination for cause.
Unilateral price/plan changes: If you do not accept and notify them promptly, you can assert the right to cancel without penalties.
Arbitration clauses: Many contracts include arbitration. You can still seek help from the NTC (regulator jurisdiction). Arbitration may govern damages, but it does not wipe out your regulatory remedies.
Collections & credit reporting: If a disputed ETF is sent to collections or reported to the CIC, send a written dispute and your evidence; inaccurate or disputed entries must be corrected.
Force majeure: Temporary force-majeure events excuse performance while they last, not chronic degradation.

7) What a fair final bill looks like (rule of thumb)

Monthly service charges prorated up to your effective termination date
Less: rebates/credits for documented outages and SLA failures
₱0 ETF / pre-termination fee (termination for cause)
₱0 device charge if device returned in good order (or only fair, depreciated recovery if truly owed)
VAT computed on the net legitimate charges

8) Templates you can use

A) Notice to Cure (send before terminating)

Subject: NOTICE TO CURE – Persistent Poor Internet Service | [Account No.]

Dear [ISP Legal/Customer Care/Address per contract],

I am a subscriber under Account No. [____], service address [____], plan [____].

Since [date], I have experienced persistent poor service: [brief description]. Attached are logs of outages and speed tests, and copies of tickets [#s].

Please treat this as a NOTICE TO CURE under Article 1191 of the Civil Code and the Consumer Act. Kindly restore compliant service within [10/15] days from receipt and confirm in writing.

Absent timely and lasting cure, I will terminate the contract **for cause** and seek waiver of any pre-termination fee and rebates for the affected periods.

Sincerely,
[Name, contact details]
Attachments: [logs, screenshots, tickets, bills]

B) Termination for Cause / Resolution

Subject: TERMINATION FOR CAUSE & DEMAND FOR ETF WAIVER | [Account No.]

Dear [ISP Legal/Customer Care],

On [date], I served a Notice to Cure (attached). Despite this, service remained deficient: [summary; new tickets].

Under Article 1191 (reciprocal obligations) and the Consumer Act, I hereby **resolve/terminate the service contract for cause**, effective [date], due to your material breach.

Demands:
1) **Waiver of any pre-termination fee**, penalties, or liquidated damages as **unconscionable** given non-delivery;
2) **Rebates** for documented outages/underperformance for [months/dates], per your obligations and NTC rules;
3) **Final bill** limited to legitimate, prorated charges **net of rebates**;
4) A **clearance letter** stating my account is closed with no further liability upon settlement of the final bill.

I will return your modem/ONT on [date] at [branch]; kindly issue a **Return Receipt**.

If unresolved within [7] days, I will elevate to the **NTC** for appropriate action.

Sincerely,
[Name]
Attachments: [notice to cure, dossier]

9) How to file with the NTC (quick guide)

Prepare a sworn complaint or letter stating facts, reliefs sought (ETF waiver, rebates, final bill correction).
Attach your evidence dossier (logs, tickets, photos, bills, letters).
File at the NTC regional office serving your area or central office; keep the stamped received copy.
Attend mediation/conference; be specific about the remedy you want.
Keep copies of minutes/resolutions and the provider’s compliance letter.

Tip: Even the act of copying the NTC on your cure/termination letters often triggers a faster, more reasonable settlement.

10) Frequently asked questions

Q: The agent says “lock-in is absolute.” True? A: No. A lock-in protects the ISP from capricious cancellations, not from its own breach. With evidence and notice, you can cancel for cause and argue ₱0 ETF.

Q: They fixed it for a week, then it failed again. Do I restart notice? A: Use your original notice, add a supplemental notice documenting relapse. Chronic failure after attempts still supports termination for cause.

Q: Can I stop paying while disputing? A: Avoid full non-payment. Pay the undisputed portion and write on record that the rest is under dispute pending resolution—this blunts collection pressure and shows good faith.

Q: What if the contract forces arbitration only? A: You may still seek NTC assistance; regulatory oversight isn’t erased by private arbitration clauses.

Q: Do I get cash refunds or bill credits? A: Usually bill credits or netted in the final bill. Ask for a written computation.

11) One-page checklist

Build logs + speed tests (1–2 weeks)
Send Notice to Cure (give 10–15 days)
Allow access; collect new ticket nos.
If unresolved → send Termination for Cause + demand ETF waiver + rebates
Return modem/ONT → get receipt
Audit final bill (proration, rebates; ₱0 ETF)
If pushback → NTC complaint with dossier
Get written clearance that the account is closed, zero ETF

12) Final notes

Keep everything in writing and date-stamped.
Be polite but firm; ask for a written breakdown of any amount they claim.
Laws, NTC circulars, and small-claims thresholds can change; if your dispute is sizable or complex, consider a quick consult with counsel.

If you want, I can also generate your Notice to Cure and Termination for Cause letters—just give me your account name/number, plan, address, and a short timeline of the issues.