Olongapo Telecom & Information Technology

Sunday, June 20, 2004



This contact, made and entered into by and between-

The CITY OF OLONGAPO, represented herein by His Honor , Mayor Geronimo B. Lipumano, of legal ages, married in a resident of Olongapo City, hereinafter referred to as “CITY OF OLONGAPO”


The PILIPINO TELEPHONE CORPORATION, a corporation duly organized and existing under the law of the Philippines, with principal offices at Makati, Rizal, Philippines, represented herein by its President, MR. ANTONIO L. CHUA, hereinafter referred to as “PILTEL”


WHEREAS, pursuant to Resolution No. 90, Series of 1975 of the City Council of the City of Olongapo, the Mayor of said City in authorized to enter into a contract with any competent and qualified offer or for the constructions of a modern automatic dial telephone system in the City of Olongapo.

WHEREAS, pursuant to the said authorization, the City Mayor, for and in behalf of the City of Olongapo, is willing to execute a contract with PILTEL, a corporation duly authorized under P.. A. 6531 to operate telephone system in the Philippines, which has offered the most advantageous terms relative to the objective as above – stated;

NOW THEREFORE, for and in consideration of the forgoing premise and the reciprocal rights and obligations herein provided, she portico hereby agree and covenant, as it is hereby agreed and covenanted, that;

1. PILTEL shall establish, own, operate and maintain telephone system in Olongapo city and such other place or places as may deemed convenient and beneficial to said corporation and the CITY OF OLONGAPO.

2. The CITY OF OLONGAPO shall, in the manner hereinafter provided, transfer, assign, convey and code all of the plant, equipment, facilities, lines, wires, buildings and all other assets as listed in Annex “A” hereof presently constituting the Olongapo Telephone System including all its records and books of accounts (hereinafter referred to as the “Olongapo Telephone System”) in PILTEL. PILTEL shall take physical possession and operate the Olongapo Telephone System only upon issuance by the Board of Communications of a provisional authority authorizing PILTEL to operate and maintain a telephone system in Olongapo City; provided, however, that PILTEL shall not charge the City Government for the use of the existing manual telephone connections until after the modern automatic telephone system is operational;

3. In exchange for the Olongapo Telephone System, piltel shall issue to the City of Olongapo 7,500 Serial Preferred Shares, each with a par value of P20.00, which amounts, in terms of aggregate par value, to P150,00.00 which is equivalent to the value of the assets as listed in Annex “A” hereof, transferred to PILTEL amounting to P150,000.00 as agreed upon by the parties;

4. The Serial Preferred Stock to be issued to the CITY OF OLONGAPO shall –

I. Be entitled to annual dividends amounting to 10% of the par value of the preferred shares;
II. Within a period of five (5) years counted from the date of issue thereof, be convertible into shares of Common Stock at a conversation price equal to the par value of P40 per common share at the option of the City of Olongapo. For this purpose, a written notice within the said period by the City Mayor shall make it mandatory to convert the 10% preferred shares is issued to common shares.

5. That the City of Olongapo undertakes to execute a separate deed of conveyance of its rights and interest over the parcel of land on which the present telephone system is located under such consideration, terms and conditions mutually agreed upon by both parties;

6. The City of Olongapo shall lease to PILTEL, effective upon the latter’s take – over of the physical possession of the Olongapo Telephone System in accordance with paragraph 2 above, such electric pollen owned by the City of Olongapo which PILTEL may decide to utilized in the installation and stringing of its telephone wires. PILTEL shall pay the City of Olongapo and annual rental for the use of such poles at the rate of 200 per pole

7. Subject to the provision of existing laws, the Preferred shares of PILTEL shall be offered for subscription to the CITY OF OLONGAPO but preference shall be given to telephone subscribers who are residents of the CITY OF OLONGAPO.

8. PILTEL commits to open the necessary latter of credit for the importation of the telephone equipment not later than August 15, 1975, a copy of which will be presented is the CITY OF OLONGAPO on or before that date:

9. Within a period of 5% weeks from the issuance of provisional authority by the Board of communications authorizing the installation of an automatic telephone system in Olongapo City, PILTEL shall install and construct in Olongapo City the initial 2,000 automatic telephone lines, provided, however, that PILTEL will furnish the City of Olongapo their work program within30 days after the signing o this contract, which will be an internal part of the contract:

10. PILTEL, also guarantees that, an public interest demands and as the need arises for additional telephone lines, it will upon obtaining the requisite approvals from the board of Communication. Put up 1,000 lines every year thereafter the installation of the lot 2,000, up to at least 5,000 lines for the next five (5) years;

11. That PILTEL shall provide “ of Lines” for the following:

a. Olongapo City Police Department
b. Olongapo City Fire Department
c. City Mayor’s Office
d. Public Utilities Department
12. That the city reserved to put its own PABX or Government of Olongapo;

13. To the extent practicable, PILTEL shall continue to employ the present employees of the Olongapo Telephone System who are determined by PILTEL to be qualified an d wiling to be retained in the service.

14. in case PILTEL fails to comply with any obligations under the Contract, except in cases when such failure was caused by reasons beyond the control of PILTEL or by force majeure, acts of God, government restrictions, the City of Olongapo may declare to PILTEL.
15. In the event PILTEL to abandon its right to operate and or the telephone , PILTEL commits to give the preferential to the City of Olongapo to operate or buy said telephone system.
16. that PILTEL will apply for the necessary permit with the City of Olongapo before commencing any construction, excavation, digging. Stringing of line pursuant to this contract.
17. that this contract will be effective upon ratification by the City Council and approved by the office of the President.

IN WITNESS WHEREOF, the parties hereto have sign this Contract this 19th day of June 1975 at Provincial Rizal, Philippines.

By: By:
(Chairman ) City Mayor