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December 15, 1999

regarding

Financing of the Technical Assistance to the Sustainable Development of the Laguna de Bay Environment Project

WHEREAS, the Government of the Republic of the Philippines ("the Philippines") has requested the Government of the Kingdom of the Netherlands ("the Netherlands") for financing of the technical assistance to the Sustainable Development of the Laguna de Bay Region Project ("The Project");

WHEREAS, the Netherlands has decided to comply with the request;

NOW, THEREFORE, the Government of the Republic of the Philippines and the Government of the Kingdom of the Netherlands, have reached the following understanding which shall constitute an Agreement between the Parties:

ARTICLE I
Scope and Objectives

This Agreement sets forth the terms and procedures for the Netherlands' financing of the technical assistance for the implementation of the Project as set out in the project proposal "Sustainable Development of the Laguna de Bay Region" dated November 10, 1998.

The goal of the Project is to establish a reliably accurate tool to effectively manage the lake's water resources and properly allocate this to competing water quantity and quality dependent uses.

The objectives of the Project are:

(a) to evaluate/review and update existing data of the lake as to reliability, accuracy and consistency;
(b) to establish lake models and modelling tools that examine the physical, chemical and biological behaviour of the lake waters;
(c) to investigate the feasibility, methodology and benefits of sediment dredging including Environmental Impact Assessment (i.e. provide the Laguna Lake Development Authority with cost, benefits and where appropriate, environmental impacts of appropriate dredging activities and Terms of' Reference for sustainable development studies and initiatives);
(d) to carry out a study (indicating cost and benefits) on the Laguna de Bay as potential domestic water supply source;
(e) to carry out training focused on planning and analysis for integrated water resources management with emphasis on development of human and technical capabilities; and
(f) to conduct feasibility studies on selected proposal for infrastructure works and their impacts on the other functions and uses of the lake waters

ARTICLE II
Implementing Arrangements

1. The Parties shall co-operate fully and maintain all communication lines open to ensure that the objectives of the Project are successfully attained.
Both governments shall establish by common consent Implementing Guidelines indicating in detail the contribution of either Party, the number of Netherlands personnel and their job-descriptions, the duration of their stay on the Project and a description of the equipment and materials to be made available.

2. In matters relating to the implementation of this Agreement, the Laguna Lake Development Authority ("LLDA”) and the Royal Netherlands Embassy ("RNE") shall be the competent authorities to represent the Republic of the Philippines and the Kingdom of the Netherlands, respectively.

3. RNE shall evaluate and approve the selection of a consulting company ("Consultant"), subject to the Netherlands tender process and consistent with the Project's requirements in consultation with LLDA.

4. A contract shall be entered into by RNE on behalf of the Netherlands with the selected Consultant for implementing the Project.

5. The RNE shall transmit to the LLDA a certified true copy of an English language version of the signed contract or a final negotiated draft version of the contract.

6. In coordination with the LLDA, the representatives of Netherlands may visit any area adjacent to Laguna de Bay or any area of immediate concern to the Project and examine any relevant records and documents for purposes related to this Agreement.

ARTICLE III
Contribution and Obligation of the Netherlands

1. The Netherlands shall contribute an amount, subject to the terms and procedures set out or referred to herein, not exceeding NLG 3.012.563 (Netherlands Guilders three-million-twelve-thousand-five-hundred-sixty-three), to be used exclusively to finance the Project.

2. Any funds referred to in paragraph 1 of this Article not fully utilized for one activity may, upon previous written Agreement between the Parties, be utilized for other requirements of the Project.

3. The Netherlands through this Agreement shall donate all the scientific instruments and other related equipment, vehicles and other materials and supplies for the official use of the Project, to the LLDA at the time of entry to the Republic of the Philippines. The goods thus donated shall be actually, directly and exclusively used for the implementation of the Project.

3. The Netherlands acknowledges and recognizes that all data/information obtained and generated by the Project belongs exclusively and under the control of the Philippine Government. The Consultant shall ensure the confidentiality of said data and information.

ARTICLE IV
Contributions and Obligations of the Philippines

The Government of the Republic of the Philippines, through the LLDA, shall appropriate and provide a counterpart fund in the estimated amount of PhP2.579M. As executing agency, in addition to the obligations stated under Item 7.3 of the Terms of Reference, LLDA shall:

1. In coordination with appropriate government instrumentalities, arrange for the levy of internal revenue tax of the Consultant payable under the laws of the Philippines in respect of the emoluments paid by the Netherlands, in accordance with the Convention between the Kingdom of the Netherlands and the Republic of the Philippines on the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, signed in Manila on 9 March 1989 and entered into force on 20 September 1991.

2. Arrange for Netherlands personnel any work permits that may be required in connection with the implementation of the Project, and visas for the Netherlands personnel, their spouses and dependents; as well as arrange their repatriation in times of national crisis, if so requested by the Netherlands.

3. Assume the cost of any customs duties, sales tax and other taxes, fees and levies on all scientific instruments and other related equipment, vehicles and other materials and supplies procured by the Netherlands Government and donated to the Philippines for the benefit of the Project.

4. Promptly inform the Netherlands of any condition which interferes or threatens to interfere with the successful implementation of the Project.

ARTICLE V
Settlement of Disputes

Differences which may arise, relating to the interpretation and application of the provision of this Agreement shall be settled by means of negotiation between the Government of the Philippines and the Government of the Netherlands or in any other manner which may be mutually agreed upon.

ARTICLE VI
Entry-Into-Force

This Agreement shall be valid for a period of one (1) year and may be renewed for a similar period upon mutual Agreement of the Parties. It shall enter into force on the date of the later notification by either Party, through diplomatic channels, indicating that the domestic requirements for its entry into force have been complied with. Pending the Agreements' entry into force, it shall be provisionally applicable.

Either Party may request in writing, through diplomatic channels, to amend this Agreement. Any amendment shall enter into force in accordance with paragraph 1 of this Article.

IN WITNESS WHEREOF, the undersigned, acting on behalf of their respective Governments, have signed the present Agreement in two original copies in the English language.

Done on this 15th day of December 1999.