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MEMORANDUM OF UNDERSTANDING BETWEEN THE GOVERNMENT OF THE REPUBLIC OF THE PHILIPPINES AND THE GOVERNMENT OF CANADA CONCERNING THE LOCAL GOVERNMENT SUPPORT PROGRAM - PHASE II (PROJECT NUMBER 734/20272)

The Government of the Republic of the Philippines (hereinafter called "PHILIPPINES") and the Government of Canada (hereinafter called "CANADA"), desiring to collaborate on the implementation of a development cooperation project in the PHILIPPINES have reached the following understanding:

ARTICLE I
NATURE OF THE MEMORANDUM OF UNDERSTANDING

SECTION 1.01

This Memorandum of Understanding does not constitute an international treaty. It is a subsidiary arrangement made pursuant to the objectives and purposes of the General Agreement on Development Cooperation between the PHILIPPINES and CANADA dated 13th day of November 1987 and is intended to set out the responsibilities of the two governments in relation to the project.

ARTICLE II
RESPONSIBLE AUTHORITIES

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

The PHILIPPINES designates the National Economic Development Authority (hereinafter called "NEDA") as the agency responsible for the implementation of its obligations under this Memorandum of Understanding.

ARTICLE III
THE PROJECT

SECTION 3.01

The PHILIPPINES and CANADA will participate in the effective and efficient implementation of a project called the Local Government Support Program - Phase II ', (hereinafter called the "Project"). The goal of the Project is to assist the PHILIPPINES in realizing its objectives of equitable growth and poverty reduction through more effective local governance with enhanced stakeholder participation in the target regions: Region VI in the Western Visayas, Regions IX, X, XI, XII, XIII, and the Autonomous Region in Muslim Mindanao (ARMM) in Mindanao.

SECTION 3.02

The Project is described more fully in Annex "A" of this Memorandum of Understanding.

ARTICLE IV
MANAGEMENT STRATEGY

SECTION 4.01

For the purpose of implementing the Project, the PHILIPPINES and CANADA have developed the Management Strategy attached as Annex "A" to this Memorandum of Understanding, and duly signed by CIDA and NEDA. The Management Strategy includes the following;

a) a detailed description of the Project including a copy of the Logical Framework Analysis used in the Project Approval Document;

b) a description of how CANADA'S and the PHILIPPINES' development priorities and cross-cutting themes will be addressed in the Project;

c) a description of project management organization demonstrating the lines of authority, communication and accountability between the principal participants and decision-makers of the Project;

d) roles and responsibilities of project participants and management committees;

e) the resources required for the Project including a description of the flow of funds from the Development Fund;

f) a project performance measurement framework;

g) the reporting requirements for the Project;

h) a sustainability plan, including a phase-out plan; and

i) a contract plan.

This Management Strategy may be amended as deemed necessary by NEDA and CIDA, by mutual understanding through an exchange of letters.

ARTICLE V
CONTRIBUTION OF CANADA

SECTION 5.01

The contribution of CANADA will consist of the provision of Canadian professional, technical and advisory services, management services, and the services of Canadian monitor(s), evaluator(s) and consultants, all as more particularly described in Annex "A": of this Memorandum of Understanding. The total value of CANADA'S contribution will not exceed nine million, five hundred and twenty-five thousand Canadian dollars (Cdn$9,525,000).

SECTION 5.02

The proceeds of CANADA'S contribution will not be used by the PHILIPPINES to pay any : taxes, fees, customs duties or any other levies or charges imposed directly or indirectly by the PHILIPPINES on any goods, materials, equipment, vehicles and services purchased or acquired to meet project requirements or in relation to the implementation of the Project.

ARTICLE VI
CONTRIBUTION OF THE PHILIPPINES

SECTION 6.01

The contribution of the Philippines will consist of the provision of funds out of the Canada-Philippines Development Counterpart Fund (hereinafter called the "Development Fund"), and will be used for financing all local costs of the Project, including the costs 1 of local staff, local consultants, national and regional field office expenses, local travel and the local costs of project activities; the provision of the services of local technical advisors and/or sectoral specialists, the services of consultants to monitor and/or evaluate the Project, all as more particularly described in Annex "A" of this Memorandum of Understanding. The total value of the PHILIPPINES' contribution will not exceed twenty million, four hundred and fifty-eight thousand Canadian dollars (Cdn$20,458,000) and will be subject to the availability of adequate funds in the Development Fund.

The contribution of the PHILIPPINES will be made in accordance with the Memorandum of Understanding on the Development Fund signed between the PHILIPPINES and CANADA on 20 June 1996 and amended on 10 December 1997, and in accordance with a mutually agreeable disbursement schedule.

ARTICLE VII
SOCIAL AND ENVIRONMENTAL SUSTAINABILITY

In implementing the Project, the PHILIPPINES and CANADA will undertake measures to ensure adequate consideration and appropriate integration of social and gender equity and environmental activities.

ARTICLE VIII
INFORMATION

SECTION 8.01

The PHILIPPINES and CANADA will ensure that this Memorandum of Understanding is implemented with due diligence and efficiently, and each will furnish to the other all such information relating to the Project as will reasonably be requested.

ARTICLE IX
COMMUNICATIONS

Any communications or documents given, made or sent by either the PHILIPPINES or CANADA pursuant to this Memorandum of Understanding, will be in writing and will be deemed to have been duly given, made or sent to the addressee for which they are intended when they have been delivered by hand, mail or facsimile to the following address:

For the PHILIPPINES:

Mailing Address:

The Director General
National Economic Development Authority (NEDA)

Amber Avenue

Pasig City, Metro Manila
Facsimile: (632) 631-3747

For CANADA:

Mailing address:

The President
Canadian international Development Agency (CIDA)
c/o Head of Development Cooperation Section

Canadian Embassy

11th Floor, Allied Bank Center
6754 Ayala Avenue
Makati City, Philippines
Facsimile: (632) 810-5142

SECTION 9.02

The PHILIPPINES or CANADA may, by written notice to the addressee hereto, change the address to which all documents or communications are to be submitted.

SECTION 9.03

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

ARTICLE X
CONSULTATION

SECTION 10.01

The PHILIPPINES and CANADA will consult each other in respect of any matter that may arise in connection with this Memorandum of Understanding.

ARTICLE XI
APPLICATION

SECTION 11.02

Differences which may arise in applying the provisions of this Memorandum of Understanding will be settled by means of negotiations between the PHILIPPINES and CANADA, or by any other manner mutually agreed upon.

ARTICLE XII
GENERAL PROVISIONS

SECTION 12.01

This Memorandum of Understanding together with Annex "A", which forms an integral part hereof, constitutes the entire understanding between the PHILIPPINES and CANADA with respect to the Project.

SECTION 12.02

This Memorandum of Understanding may be amended as deemed necessary by the PHILIPPINES and CANADA, by mutual understanding through an exchange of letters.

SECTION 12.03

This Memorandum of Understanding will take effect on the date of the later notification by the Parties, through diplomatic channels indicating that the domestic requirements for its entry into force, have been complied with.

IN WITNESS WHEREOF, the undersigned have signed this Memorandum of Understanding in duplicate, in Manila, Philippines, this 27 day of January, 1999.