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March 27, 1995

The Government of the Kingdom of Belgium, hereinafter referred to as "the Government of Belgium"

and

the Government of the Republic of the Philippines, hereinafter referred to as "the Government of the Philippines,"

Considering the Agreement on Economic, Industrial, Scientific, Technical and Development Cooperation between the Belgo-Luxembourg Economic Union and The Republic of the Philippines, signed on January 15,1987;

Considering the Memorandum of Understanding on Cooperation between the Republic of the Philippines and the Kingdom of Belgium, signed in Brussels on September 15,1994;

HAVE AGREED AS FOLLOWS:

ARTICLE 1. DEFINITION OF THE PROJECT

The Government of Belgium and the Government of the Philippines agree to join in the implementation of an "Agrarian Reform Support Project in the Provinces of Negros Oriental, Bohol and Cebu, Region VII, The Philippines", hereinafter called "the Project".

The Project is fully described in the Technical and Financial File which is attached to this Agreement and which forms an integral part of it.

The Project is planned for a period of three years.

The total Project cost is estimated at 210 million Belgian Francs or 182 million pesos. The total Belgian contribution is estimated at 140 million Belgian Francs (120 million pesos); this contribution consists in grants in cash of 125,861/000 BEF and in a contribution in kind of 14,271,472 BEF.

The contribution of the Government of the Philippines is estimated at 37 million Pesos, equivalent to 43 million Belgian Francs.

The contributions of Local Financial Intermediaries, the Local Government Units and the Project Beneficiaries are respectively estimated at 18.5 million pesos (20 million Belgian Francs), 4 million pesos (4.5 million Belgian Francs) and 2.5 million pesos (2.9 million Belgian Francs).

ARTICLE 2. RESPONSIBILITIES

2.1 The Government of Belgium nominates the Belgian Administration for Development Cooperation, hereinafter referred to as "BADC", as the coordinating agency responsible for the Belgian contribution to the project. BADC is represented in the Philippines by the Development Cooperation Division of the Belgian Embassy in Manila.

2.2 The Government of the Philippines nominates the Department of Agrarian Reform, hereinafter called DAR, as the Executing Agency, responsible for the Filipino contribution to the project.

2.3 Project activities shall be carried out by the Project Office (PO) which will be established in Dumaguete.

ARTICLE 3. CONTRIBUTION OF THE GOVERNMENT OF BELGIUM

The Government of Belgium shall make the following contribution to the Project:

3.1 Personnel

3.1.1 Permanent Adviser

• to recruit for the full duration of the Project one full time qualified Belgian Adviser. His application shall be sent for approval to DAR. In case of striking shortcomings of the expert both BADC and DAR are entitled to request the other party to withdraw him;

• to bear the salary costs of the permanent Adviser;

• to bear the costs of accommodation and of traveling on duty of the permanent Adviser, according to the Belgian regulations;

3.1.2 Belgian Short-Term Expert

• to recruit one Belgian Short-Term Consultant for the Consulting Mission and to bear the costs of his traveling, accommodation and fees according to the Belgian regulations;

3.1.3 Filipino personnel

• to bear part of the personnel costs for the land transfer component, for the institutional strengthening component and for the productivity component as detailed in the Technical and Financial File;

• to bear the costs of the traveling, the accommodation and the fees, according to the Filipino regulations, for the local Short-Term Consultant for the evaluation mission, as described in Article 6 hereafter;

• to bear the salary of one Financial Controller in the Project Office;

• to contract a national NGO/Farmer's Organization (FO)/or any other legitimate and qualified institution which will provide the Project Manager and 3 specialists in agronomy/agricultural economics, training, monitoring and evaluation;

3.2 Equipment

• to procure and to bear the entire cost of the equipment as detailed in the Technical and Financial File;

• to bear the costs of the CEF transportation of the equipment, imported from Belgium, to Cebu port or airport;

All equipment purchased by BADC remains the property of Belgium during the implementing period of the Project At the end of the Project, the Government of Belgium and the Government of the Philippines will agree on the transfer of the property of this equipment to the Philippines.

3.3 Infrastructure

• to bear the costs of the Project Office in Dumaguete as described in the Technical and Financial File;

3.4 Operational and Recurrent Costs

• to bear a part of operational and recurrent costs for the land transfer component for the institutional strengthening component and for the productivity component, as described in the Technical and Financial File;

ARTICLE 4. CONTRIBUTION OF THE GOVERNMENT OF THE PHILIPPINES

The Government of the Philippines shall make the following contributions to the project:

4.1 In general:

• to provide all necessary assistance to the permanent Adviser and to the Belgian and local consultants in order to perform their project activities;

• to provide to the permanent Adviser, to the Belgian and local consultants, all available information and documentation which might be relevant to the project;

• to facilitate the execution of the project, its sustainability and continuity at the end of the Belgian contribution;

4.2 Personnel

4.2.1 Permanent Adviser

• to exempt the permanent Adviser from internal taxes;

• to exempt the permanent Adviser from payment of custom duties and other taxes on his personal effects imported "within six months .after his first arrival;

• to exempt the permanent Adviser from custom duties and other taxes on his household removals imported within six months after his first arrival;

• to exempt the permanent Adviser from custom duties and other taxes on one motor vehicle on condition that it is imported within six months from the date of his first arrival and it is re-exported or sold to a person who has the privileges or duties paid on its assessed value at the time of sale within the Philippines;

• to assist the permanent Adviser and his family with respect to any necessary entry and exit visas, stay permits, and other documents required for their stay in the Philippines;

4.2.2 Filipino personnel

• to ensure the permanent presence of all Filipino personnel at the provincial, and village level/ identified for the execution of the project However, in case of severe shortcomings, both Governments are entitled to send the other a motivated request for withdrawal of personnel;

• to cover the entire costs of survey fees;

• to cover the entire costs of DAR personnel involved in community mobilization;

• to bear the salary of the following staffing personnel in the Project Office: one secretary, two drivers and one clerk/messenger;

• to cover the normal salary costs of permanent government personnel assigned to the project;

4.3 Equipment

• to bear all costs such as customs duties storage fees and selected costs in the importation of goods and equipment for the project from Belgium into the Philippines;

• to take care of, and to bear the costs of custom clearance, unloading, transport and storage within the Philippines of the goods and equipment supplied by the Government of Belgium;

• to bear the costs of installation, custody, maintenance and insurance of this equipment;

• to ensure that all project vehicles and equipment provided by the Government of Belgium, will be used exclusively for the project activities;

4.4 Infrastructure

• to provide appropriate office space required for the Project Office in Dumaguete;

4.5 Operating Costs

• to cover the entire transport operating costs for the survey activities and for DAR personnel involved in community mobilization;

4.6 Project Steering Committee

• to establish a Project Steering Committee (PSC);

ARTICLE 5. MANAGEMENT AND MONITORING

5.1 The Management and Monitoring are ensured by.

5.1.1 The Project Office (PO)

This office will be responsible for the coordination of the project; it shall be established as an administrative unit within the office of the Secretary of DAR, but is shall operate in an autonomous manner.

It will be staffed by a Project Manager, provided by a national NGO/FO/or any other legitimate and qualified institution, and a permanent Adviser; the duties of these project coordinators are:

• to take care of the implementation of all project components in the project area and thus contribute to the achievement of its objective and goals, as described in the technical and financial file;

• to submit within the first 4 months of project activities a Plan of Operation for the whole duration of the Project and an initial workplan and budget to the Project Steering Committee;

• to prepare in English, for discussion within the Project Steering Committee, the draft of the year report concerning the activities and the results of the preceding year and prepare the workplan and budget for the following one;

• to submit the year report to both Governments within two months after the end of each working year;

• to prepare at the end of the Project in English, the final report and submit within four months to all parties in the project.

5.1.2 The Project Steering Committee (PSC) The duties of the PSC are:

• to take responsibility on behalf of the Government for approving the project's annual workplans, for reviewing project progress and for providing policy guidance as necessary;

• to have at least two meetings a year (July and January) in order to prepare the year report and to prepare the working plan and the budget for the following year; This Project Steering Committee will be chaired by DAR.

5.1.3 The Provincial Consultative Committee (PCC) The duty of the PCC is to deal with technical consultation and coordination at the provincial level.

ARTICLE 6. EVALUATION AND CONTROL

Both BADC and DAR, jointly or separately, are entitled to control the project activities at any moment of the project duration. During the third year of the project a joint evaluation mission will be organized.

ARTICLE 7. DOCUMENTS

All documents and data that proceed from the activities of the project are the property of both Governments. Any presentation or publication will recognize the bilateral origin of the project work.

ARTICLE 8. SPECIAL CONDITIONS

The release of the bulk of the Belgian funds to Agrarian Reform Communities (ARCs) for Productivity Development will be dependent on land titles being distributed to the agrarian reform beneficiaries involved in the proposed Project. Continuing Belgian support for the Project will be conditional on funds being made available by DAR for the hiring of Geodetic Engineers and the deployment of survey teams in good time, i.e. before the end of the first month in each financial year (and within two months of the commencement of project activities in project year one).

ARTICLE 9. FINAL DISPOSITIONS

The present Agreement shall remain valid for the full duration of the project implementation expected to be 36 months

It may be canceled by either Government through a six-month prior written notice.

It may be amended or extended by exchange of letters between the two Governments.

It will come into force on the date of its signing.

Done in Manila, on 27th of March 1995, in the English language and in duplicate each having the value of the original.