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December 21, 1987

SECTION 1.01

This Memorandum of Understanding does not constitute an international treaty: it is intended only to set out the responsibilities of the two Governments in relation to the Project.

SECTION 2.01

CANADA designates the Canadian International Development Agency (hereinafter called "CIDA") as the agency responsible for the implementation of its obligations under this Memorandum of Understanding.

SECTION 2.02

PHILIPPINES designates the Department of Transportation and Communications (hereinafter called "Department") as the agency responsible for the implementation of its obligations under this Memorandum of Understanding.

SECTION 3.01

CANADA and PHILIPPINES shall participate in a line of credit project (hereinafter called the "Project"), the objective of which is to use the proceeds of the contribution made available hereunder by CANADA to PHILIPPINES for the purpose described in Annex "A".

SECTION 3.02

The procurement of goods and services relating to the Project will be performed by PHILIPPINES in accordance with the procedures referred to in Annex "D:.

SECTION 3.03

A Steering Committee will be formed composed of CIDA's representative at the Canadian Embassy in Manila, the Department's representatives and other representatives agreed to by CANADA and PHILIPPINES.

SECTION 3.04

The Steering Committee will facilitate the execution and the monitoring of the Project.

SECTION 3.05

CANADA shall have the right to conduct any inspection of the goods on the system and conduct an evaluation of the system and its usage in collaboration with PHILIPPINES.

SECTION 4.01

CANADA shall make available to PHILIPPINES, on terms and conditions hereinafter set forth, a contribution in an amount not to exceed four hundred and fifty thousand Canadian dollars (Cdn $450,000.) (hereinafter called "the contribution"). The amount of the contribution shall be al1ocated as follows:

(a) four hundred thousand Canadian dollars (Cdn $400,000.) for the line of credit; and

(b) fifty thousand Canadian dollars (Cdn $50,000.) for the evaluation component of the Project.

SECTION 4.02

The responsibilities of CANADA are more particularly described in Annex "C".

SECTION 4.03

The proceeds of the contribution shall not be used by PHILIPPINES to pay any taxes, fees, customs duties or any other levies or charges imposed directly or indirectly by PHILIPPINES on any goods, materials, equipment, vehicles and services purchased or acquired for, or related to, the execution of the Project.

SECTION 5.01

PHILIPPINES shall provide the necessary funds and other resources in accordance with the budgetary or resource requirements to be prepared and agreed upon by both parties necessary to implement the Project. In no case shall the PHILIPPINES be required to incur foreign exchange expenditures to implement this Project.

SECTION 5.02

PHILIPPINES shall undertake to approve the use of the radio frequencies necessary for the Project.

SECTION 5.03

PHILIPPINES shall undertake to ensure that all necessary interconnection, cost sharing, organisational, management and such like agreements between participating organizations are in place before construction is completed.

SECTION 5.04

PHILIPPINES shall be responsible for all local costs incurred.

SECTION 5.05

The responsibilities of PHILIPPINES are more particularly described in Annex "B".

SECTION 6.01

Except as may otherwise be specifically agreed to by CANADA, the proceeds of the contribution shall be used by PHILIPPINES exclusively for the Project in accordance with Annex "A". The procedures for procurement of, and payment for, any goods and services to be purchased or acquired for the Project shall be those set forth in Annex "D". Goods and services purchased or acquired with the proceeds of the contribution shall be used exclusively for the purpose of the Project.

SECTION 6.02

Goods and services purchased or acquired in Canada with the proceeds of the contribution shall have an overall Canadian content of not less than sixty-six and two-thirds per cent (66 2/3%).

SECTION 6.03

Goods and services contracted for prior to the effective date of this Memorandum of Understanding may not be financed out of the proceeds of the contribution except as may otherwise be agreed to by CANADA.

SECTION 6.04

If the full amount of the contribution is not committed before the 31st day of March 1989, the balance will be cancelled, unless otherwise agreed to by CANADA.

SECTION 7.01

If any of the following events occurs, and continues to occur, CANADA may, by sixty (60) days written notice to PHILIPPINES, specifying the reason for suspension, suspend in whole or in part the right of PHILIPPINES to obtain money from the contribution:

(a) a default on the part of PHILIPPINES in the performance of any responsibilities under this Memorandum of Understanding;

(b) any extraordinary situation which renders it impossible for PHILIPPINES or CANADA to perform its responsibilities under this Memorandum of Understanding.

SECTION 7.02

If suspension occurs and continues for thirty (30) days, CANADA may, by sixty (60) days' written notice to PHILIPPINES, cancel that part of the contribution not disbursed prior to the giving of such notice.

SECTION 8.01

For the purpose of this Memorandum of Understanding:

(a) "Canadian firm" means Canadian or other non-Filipino firms, partnerships or institutions engaged in the Project;

(b) "Canadian personnel" means Canadian or non-Filipino or other non-permanent residents of Philippines, who are working in Philippines on the Project;

(c) "Dependant" means:

(i) the spouse of a member of the Canadian personnel, including a person of the opposite sex with whom the member of the Canadian personnel has lived and publicly represented as his/her spouse for a period of not less than one year before the commencement of his/her period of service in Phi1ippines;

(ii) a child of the member of the Canadian personnel, or his/her spouse who is:

1. under twenty-one years of age and dependent on the member of the Canadian personnel or his/her spouse for support, or

2. twenty-one years of age or older and dependent on the member of the Canadian personnel or his/her spouse for support by reason of mental or physical incapacity.

SECTION 9.01

PHILIPPINES shall indemnify and save harmless CANADA, Canadian firms and Canadian personnel from civil liability, for acts or omissions occurring in the course of the performance of their duties in the execution of the Project except for acts arising from gross negligence or willful misconduct of Canadian firms or Canadian personnel.

SECTION 10.01

PHILIPPINES shall exempt Canadian firms and Canadian personnel and their dependants from taxes imposed on income provided such income arises outside of Philippines or from Canadian aid funds as provided in this Memorandum of Understanding. In addition, PHILIPPINES shall exempt Canadian firms and Canadian personnel, including their dependants, from any obligations to present written declarations in relation to these exemptions.

SECTION 10.02

PHILIPPINES shall exempt Canadian firms and Canadian personnel from import duties, customs tariffs and all other duties, charges or levies on technical and professional equipment for use in the Project by Canadian personnel, or persons designated by PHILIPPINES provided that exemption from such duties, tariffs, charges or levies shall only apply to goods or equipment procured from outside Philippines.

SECTION 10.03

PHILIPPINES shall exempt Canadian personnel and their dependents upon their first arrival in Philippines and for six (6) months thereafter, from customs duties, other duties, taxes, levies and other charges of similar nature, on personal effects and household appliances and vehicles, subject to the re-exportation or to the termination of the useful life of such effects or to the disposal of said effects to persons enjoying similar exemptions. In the event of fire or theft, this exemption may be re-exercised at any time during the assignment of each Canadian and their dependants.

SECTION 10.04

Funds, equipment, products, materials and any other goods acquired for, or related to, the execution of the Project shall not be subject to any taxes, import duties, customs tariffs, inspection fees or storage charges or any other levies, duties, fees or charges.

SECTION 10.05

PHILIPPINES shall grant Canadian firms and Canadian personnel freedom from currency exchange restrictions in respect of the re-exportation of their salaries, fees, remunerations or other revenues transferred from abroad through authorized banking institutions in Philippines.

SECTION 10.06

Upon request, PHILIPPINES shall inform Canadian firms and Canadian personnel and their dependants of local 1aws and regulations which may concern them in the performance of their duties.

SECTION 10.07

PHILIPPINES shall facilitate the repatriation of Canadian personnel and their dependants in cases where, in the opinion of CANADA or PHILIPPINES, the life or safety of the said Canadian personnel or their dependants is endangered.

SECTION 10.08

PHILIPPINES shall provide all Canadian personnel and their dependants multiple entry and exit visas for travel to and from Philippines and will be responsible for providing security clearances, permits and other similar documentation.

SECTION 10.09

PHILIPPINES shall afford all accredited representatives of CIDA and Canadian personnel all necessary opportunity to visit any part of Philippines for official activities related to the Project.

SECTION 11.01

PHILIPPINES and CANADA shall ensure that this Memorandum of Understanding is carried out with due diligence and efficiency and each shall furnish to the other all such information relating to the Project as shall reasonably be requested.

SECTION 12.01

Any communications or documents given, made or sent by either PHILIPPINES or CANADA pursuant to this Memorandum of Understanding, shall be in writing and shall be deemed to have been duly given, made or sent to the party to which it is addressed at the time of its delivery by hand, mail, telegram, cable or telex at its respective address, namely:

SECTION 12.02

Any one of the parties hereto may, by written notice to the other party hereto, change the address to which any notice or request intended for the party so giving such notice shall be addressed.

SECTION 12.03

All communications and documents submitted to CANADA shall be in either the English or the French language, and those submitted to PHILIPPINES shall be in the English language.

SECTION 13.01

Differences which may arise in the application of the provisions of this Memorandum of Understanding shall be settled by means of negotiations between CANADA and PHILIPPINES or by any other manner mutually agreed upon by their respective Governments.

SECTION 14.01

This Memorandum of Understanding together with Annexes "A", "B", "C" and "D" which form an integral part hereof constitutes the entire understanding between the Parties with respect to the Project.

SECTION 15.01

CANADA and PHILIPPINES will endeavour to consult each other, in respect of any matter that may from time to time arise in connection with this Memorandum of Understanding.

SECTION 16.01

This Memorandum of Understanding shall come into force and effect on the date of signature and shall expire on the 31st day of March 1989. This Memorandum of Understanding may be amended by both parties from time to time, as deemed necessary, by mutual agreement by an exchange of letters.

IN WITNESS WHEREOF, the undersigned have signed this Memorandum of Understanding in duplicate in Manila on the 21st day of December, 1987.