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October 14, 1954

Note: The Agreement entered into force, January 19, 1955.

Reference: This Agreement is also published in 241 UNTS, p. 514.

I

THE AMERICAN AMBASSADOR TO THE PHILIPPINE SECRETARY OF FOREIGN AFFAIRS

AMERICAN EMBASSY

Excellency:

I have the honor to refer to the agreement between the United States of America and the Republic of the Philippines effected by an exchange of notes dated February 18 and 19, 1952, relating to guaranties authorized by Section III (b) (3) of the Economic Cooperation Act of 1948, as amended. I also have the honor to refer to recent conversations between representatives of our two Governments on the same subject and to confirm the understandings shall be modified as follows:

1. The Government of the Philippines and of the United States of America will, upon the request of either of them, consult respecting projects in the Philippines proposed by nationals of the United States of America with regard to which guaranties under Section III (b) (3) of the Economic Cooperation Act of 1948, as heretofore amended, have been made or are under consideration. With respect to such guaranties extending to projects which are approved by the Government of the Philippines in accordance with the provisions of the aforesaid Section, the Government of the Philippines agrees:

2. That if the Government of the United States of America makes payment in United States dollars to any person under any such guaranty, the Government of the Philippines will recognize the transfer to the United States of America of any right, title or interest of such person in assets, currency, credits, or other property on account of which such payment was made and the subrogation of the United States of America to any claim or cause of action of such person arising in connection therewith. The Government of the Philippines shall also recognize any transfer to the Government of the United States of America pursuant to such guaranty of any compensation for loss covered by such guaranties received from any source other than the Government of the United States of America.

3. That the peso amounts acquired by the Government of the United States of America pursuant to such guaranties should be accorded treatment not less favorable than that accorded, at the time of such acquisition, to private funds arising from transactions of the United States nationals which are comparable to the transactions covered by such guaranties.

4. That the peso amounts acquired by the Government of the United States of America pursuant to informational media guaranties will be freely available to the Government of the United States of America for administrative expenditures, except insofar as the gross aggregate accruals of such pesos during each twelve-month period beginning March 1, 1955 exceeds the equivalent of two million, eight hundred thousand United States dollars computed at a rate of exchange for such dollars applicable to these types of transactions under the rules and regulations of the Government of the Philippines at the time said peso amounts were acquired by the Government of the United States of America.

5. That the peso amounts acquired by the Government of the United States of America under informational media guaranty operations in excess of two million, eight hundred thousand United States dollars during any twelve-month period beginning March 1, 1955 shall be available to the Government of the United States of America and approved by the Government of the Philippines. In the event that the two Governments, within a period of six months following the expiration of each twelve-month period referred to in paragraph 4 above, have not reached an agreement as to the activities for which any such peso amounts may be expended, such peso amounts will become freely available to the Government of the United States of America for administrative expenditures.

6. That any claim against the Government of the Philippines to which the Government of the United States of America may be subrogated as the result of any payment under such a guaranty, shall be the subject of direct negotiations between the two Governments. If within a reasonable period, they are unable to settle the claim by agreement, it shall be referred for final and binding determination to a sole arbitrator selected by mutual agreement. If the Governments are unable, within a period of three months, to agree upon such selection, the arbitrator shall be one who may be designated by the President of the International Court of Justice at the request of either Government.

Upon receipt of a note from Your Excellency indicating that the foregoing provisions are acceptable to the Government of the Philippines, the Government of the United States of America will consider that this note and your reply thereto constitute an agreement between the two Governments, the agreement to enter into force on the date of your note in reply.

Accept, Excellency, the renewed assurances of my distinguished consideration.

II

THE PHILIPPINE SECRETARY OF FOREIGN AFFAIRS TO THE AMERICAN AMBASSADOR

REPUBLIC OF THE PHILIPPINES
DEPARTMENT OF FOREIGN AFFAIRS

Manila, January 19, 1955

Excellency;

I have the honor to refer to Your Excellency's note No. 0453 dated October 14, 1954, which is as follows:

[See note I]

and to confirm, in behalf of the Government of the Philippines, that the previous understandings reached on the subject between the representatives of our two Governments are to be modified as indicated in your above-quoted note. It is understood that the beginning of each twelve-month period referred to in paragraphs 4 and 5 of Your Excellency's note shall be March 1 starting with March 1, 1955.

Accept, Excellency, the renewed assurances of my highest consideration.

His Excellency R. A. SPRUANCE
Ambassador to the United States of America