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April 05, 1998

The Commission of the European Communities, hereinafter referred to as "The Commission", acting for and on behalf of the European Community, hereinafter referred to as THE COMMUNITY"

of the one part, and

the Government of the Philippines, hereafter referred to as "THE RECIPIENT"

of the other part,

HAVE AGREED AS FOLLOWS:

ARTICLE 5
ENTRY INTO FORCE

This Rider to the Financing Agreement shall enter into force on the date on which it has been signed by both parties.

The Annexes shall be deemed an integral part of this Agreement.

All terms and conditions of the Financing Memorandum remain unchanged except for the following amendments

ANNEX A
TECHNICAL AND ADMINISTRATIVE PROVISIONS

Recipient:	The Republic of the Philippines
Title:	Agrarian Reform Support Project
Project no:	ALA 94/29

The term "Project Office" shall now read as "Project Management Office" throughout the FM.

The following articles shall now read as follows: 1.3 Location

1.3 Location

The project will operate in 63 selected agrarian reform communities in five provinces of the Philippines, namely Camarines Sur, Sorsogon (Municipality of Irosin), Negros Occidental, Agusan Norte and Agusan Sur. The Project Management Office (PMO) will be located in Cebu, and the three Provincial Project Offices (PPO) in Naga (for Camarines Sur and Sorsogon), Bacolod (for Negros Occicental), and Butuan (for the two Agusans).

1.4. Costs and financing

The total direct cols of the project, over a five-year period, is estimated at 26,833,000 ECU. Of this, the EC grant will cover 20,000,000 ECU, while the Government of the Philippines will cover the remaining costs of the project from its national budget.

In addition, it is expected that other project partners will make additional contributions to project acitivites. These are indicatively estimated at 3,230,000 ECU from Land Bank of the Philippines (in credit to participating farmers), 630,000 ECU or any appropriate contribution within the limits of their revenue base, from local government untis (in a contribution towards infrastructure costs), and 460,000 ECU from fanner participants (in their share of credit costs).

2.1 Project components

Individual project components will include the following:

- Land Transfer: the project will facilitate the accelerated transfer to agrarian reform beneficiaries by the Department of Agrarian Reform of an estimated 171,000 hectares of public or private lands. Of this, it is expected that approximately 33,700 hectares will be transferred under individual CLOAs (Certificates of Land Ownership Award) to the ARBs, and the rest under collective CLOAs.

- Institutional Strengthening: (as per original text)

- Productivity Development: the project will help an estimated 40,500 agrarian reform beneficiaries, (in the 63 ARSP-covered ARCs) increase their production and incomes. Inter alia, the project will provide assistance in:

- (subsequent points as per original text)

- Project Administration: (as per original text) 2.2 Project Inputs

2.2 Project Inputs

Project inputs will include the following:

(The last hyphened (-) paragraph shall read as follows)

- technical assistance, amounting to some 180 man/months of expatriate consulting services, and some 173 man/months of local consulting services.

2.4 Financial and other contributions

2.4.1 The EC grant will cover the entire cost of technical assistance and equipment as well as a part of operational and personnel and recurrent costs from the land transfer component (excluding costs associated with collective survey work), for the institutional strengthening component (excluding salary and transport costs for DAR. personnel employed on community mobilization as outlined in Article 2.4.2 below), for the productivity development component (excluding contributions from other project partners as outlined in Article 2.4.3. below), and for the costs of the project offices (excluding approximately half of the costs of project personnel).

2.4.2 The Philippine Government contribution will cover the entire costs of survey fees for collective surveys (in all project areas), of DAR personnel involved in community mobilization (in all project areas), and the transport costs associated with these two elements, as well as approximately half of the cost of project personnel in the various project offices. In addition, the Government will make an in-kind contribution to cover the entire costs of land acquisition for agrarian reform beneficiaries covered by the project, any costs of land or rights-of-way for works financed by the project, as well as covering the normal salary cost of permanent government personnel assigned to the project, and providing office space of the Project Management Office in Cebu and the Liaison Office in Manila.

2.4.3 Contributions of other project partners are also expected to cover part of the costs of the Productivity Development component. Local Government Units concerned will be expected to cover some 20 %, or within the limits of their revenue base of the total cost of basic infrastructure works, and farmer beneficiaries will be expected to cover a proportion of credit costs (some 10 % for irrigation investments, and some 5 % for other actions). Local Financial Institutions, acting as financial conduits for ARSP, will be expected to cover the remainder of the cost of other productivity improvements (excluding irrigation). These contributions shall be governed by respective Memoranda of Agreement to be entered into between these partners and DAR and/or the PMO.

2.5 Cost estimate

2.5.1 EC grant

2.5.2 Philippine Government contribution

This Philippine Government contribution shall be made from the budgetary resources of the national government. The figures shown above is inclusive of the normal salary costs of permanent government personnel assigned to the project, and the cost of providing office space for the Project Management Office in Cebu, and the Liaison Office in Manila. However, these figures do not include the cost of land acquisition, the cost of land required for project facilities or investments (including any compensation for rights of way), which shall also be covered in full by the government.

2.6 Implementation

2.6.1 General

The Department of Agrarian Reform (DAR) shall be the Executing Agency. Project activities will be carried out by a Project Management Office (PMO) to be established for this purpose in Cebu. This office will be responsible for overall project planning and implementation, coordination, management and monitoring. Three Provincial Project Offices (PPOs) will be established in Naga, Bacolod and Butuan. Under the supervision of the PMO in Cebu, these PPOs shall be responsible for the planning and implementation of the project activities in their respective areas. To asist the Project Office in its routine administrativeand Liaison work, a small Liaison office shall be established in Manila, under the direction of the Project Management Office.

Individual project activities will be implemented by the PPOs, or by local communities, NGOs, LGUs, DAR field units or other appropriate government Training and performance monitoring of local NGOs working with the project at field level, within the framework of the respective provincial work plans, shall be carried out on behalf of the project by the NGO Adviser who is attached to the PPO.

2.6.2.Project Management Office and Project Directors

(The second paragraph will read as follows)
For administrative purposes, the PMO with its subordinate units shall be established as an administrative unit within the DAR, particularly under the Support Services Office - Project Development and Management Staff (PDMS). However, the PMO shall from the beginning operate in an autonomous fashion, in accordance with article 3.1 below, within the framework of agreed work plan.

(The sixth paragraph and subsequent paragraphs will read as follows)
A deputy to the National Co-Director shall be appointed to assist the Co-Directors and provide for continuity of project operations particularly the financial, administrative and technical functions in the absence of the National Co-Director. The Deputy Director shall be appointed by the DAR after concurrence of the Commission.

Each of the three PPOs shall be headed by a Provincial Project Director who will be appointed by the Secretary of DAR. These appointments shall be subject likewise to the concurrence of the Commission, on the basis of the candidates' technical skills and experience. In each PPO the Provincial Project Director shall be responsible to the Co-Directors for the implementation of project activities in their respective area. However, the administration of EU-funds at PPO level shall be the joint responsibility of the Provincial Project Director and the PPO Administrative Officer. Each PPO shall have an adequate technical and administrative staff to assist the Provincial Project Director in the execution of his duties.

The Project Management Office shall be responsible to appoint an NGO Advisor, one each to the PPO, in close consultation with the local NGOs' and DAR. The NGO Advisor shall be responsible to advice the Provinicial Project Director concerning all NGO related activities and matters.

2.6.3 Work plan and reporting

The two Co-Directors shall be jointly responsible for the:

(The last hyphened (-) paragraph shall read as follows)

- the preparation of three quarterly reports over the first three quarters and project progress and annual reports on project achievements.

2.6.4 Project Committees

(The second and third paragraphs will be combined and shall read as follows) Project achievements, technical consultation and coordination, including the effectiveness of the cooperation among the different partners in the field at the provincial level, shall be dealt with by a Provincial Consultative Committee (PCC) to be established in each of the 5 provinces. These Committees shall be chaired by the National Co-Director, and shall include representative of the field units of DAR, of provincial and municipal governments, of farmers' groups and of local NGOs, and of such public of private sector bodies as may be appropriate. The Provincial Co-Managers shall act as Secretary of each PCC.

3.6 Land surveys: EC funds provided for land survey activities shall be used only for subdivision surveys in order to generate individual certificates on title for agrarian reform beneficiaries. Boundary and segregation surveys shall be covered by the Philippine Government contribution, of which funds will be routed through the established GOP/DAR channels. The Government shall also take the necessary steps to permit the granting of survey contracts at provincial level up to 1,0 million Pesos.