NEC, Digitel settle supply contract dispute

Digital Telecommunications Philippines Inc. (Digitel) and Japan’s NEC Corp. have finally settled all claims and liabilities with respect to a supply contract they had forged in 1995.

Under the supply contract, NEC agreed to supply to Digitel and install on a turnkey basis a public switched telephone network in the Philippines as part of the Gokongwei-owned firm’s Luzon Telecommunications Development Program.

In a disclosure to the Philippine Stock Exchange, Digitel corporate secretary William S. Pamintuan said both companies agreed to withdraw and terminate cases and proceedings that have been filed by either party against the other in the relevant courts and arbitral tribunals relating to the dispute arising from the supply contract.

Digitel reportedly owes NEC $237 million in unpaid telecommunications equipment. The total obligation would have been payable until 2007.

In Nov. 2002, Digitel filed before the Makati Regional Trial Court a petition seeking to enjoin the termination of the contract. Digitel also alleged that NEC has committed various breaches of the contract, including the alleged faulty conditions of some of the switching equipment.

The Makati RTC, on Dec. 3, 2002, however, denied Digitel’s application for a preliminary injunction and upheld the position of NEC. NEC had even requested for arbitration pursuant to the rules of the International Chamber of Commerce (ICC) in accordance with the contract.