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August 05, 1997

The Government of the Republic of the Philippines (hereinafter called the "PHILIPPINES"), and the Government of Canada (hereinafter called "CANADA") desiring to record an understanding concerning Canadian development assistance in the Philippines have agreed as follows:

ARTICLE I
NATURE OF THE MEMORANDUM OF UNDERSTANDING

SECTION 1.01

This Memorandum of Understanding constitutes a subsidiary arrangement made pursuant to the General Agreement on Development Co-operation between the PHILIPPINES and CANADA , dated 13th day of November 1987, and is intended to set out the responsibilities of the PHILIPPINES and CANADA in relation to the Project described in Article III. It does not constitute an international treaty.

ARTICLE II
RESPONSIBLE AUTHORITIES

SECTION 2.1

CANADA designates the Canadian International Development Agency (hereinafter called "CIDA") to assume it responsibilities under this
Memorandum of Understanding. CANADA will designate a Canadian Executing Agency (hereinafter called "CEA") to be contracted through the open bidding system to assume the responsibilities related to the implementation of the Project described in Article III.

SECTION 2.02

THE PHILIPPINES designates the Department of Environment and Natural Resources (hereinafter called "DENR") to assume its responsibilities under this Memorandum of Understanding and to chair an Executive Committee which will oversee the implementation of the Project.

ARTICLE III
THE PROJECT

SECTION 3.01

The PHILIPPINES and CANADA will participate in the implementation of the Philippines-Canada Environmental and Economic Management Project (hereinafter called "THE PROJECT"). The goal of the Project is to improve the management of the watershed ecosystems in Metro Cebu and Davao City. The purpose of the Project is to strengthen and enhance the capacity of Metro Cebu and Davao City to adopt innovative government, industry, and local community governance systems to address natural resources management problems affecting their respective watershed ecosystems.

SECTION 3.02

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

ARTICLE IV
MANAGEMENT PLAN

SECTION 4.01

For the purpose of implementing the Project, CIDA and DENR will review and approve the Management Plan which will constitute an operational document and will govern project activities. The proposed Management Plan will be finalised and signed within one hundred and twenty (120) days from the date of the signature of the CEA contract and when duly signed on behalf of CIDA and DENR will be attached hereto as Annex D and will contain, inter alia, the following:

a) a detailed description of the Project;

b) an outline of the methods and means to be used to implement the Project;

c) a schedule for the implementation of the project activities, including a milestones chart;

d) the reporting requirements for the Project;

e) the nature, timing and responsibilities for project evaluations and the means by which they will be made;

f) the resources required for the Project; and

g) a statement of additional obligations, duties and responsibilities of CIDA and DENR together with their contributions, financial and otherwise.

The Management Plan may be amended, as required, without recourse to the formal amendment procedure referred to in section 12.02.

ARTICLE V
CONTRIBUTION OF CANADA

SECTION 5.01

The contribution of CANADA will consist of the development of the capacity within the Philippines to conduct strategic planning and integrated ecosystem-based natural resources management and monitoring and evaluation of the Project. CANADA'S contribution is described in Annex B of this Memorandum of Understanding. The total value of CANADA'S contribution will not exceed nine million two hundred thousand Canadian dollars (Cdn$9,200,000).

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 for, or in relation to, the implementation of the Project.

ARTICLE VI
CONTRIBUTION OF THE PHILIPPINES

SECTION 6.01

The contribution of the PHILIPPINES is described in Annex C of this Memorandum of Understanding. It will consist of one million five hundred thousand Canadian dollars (Cdn$l,500,000).

ARTICLE VII
ENVIRONMENTAL ASSESSMENT

SECTION 7.01

Since this Memorandum of Understanding involves the carrying out of one or more than one project (hereinafter called "The Project") as defined under the Canadian Environmental Assessment Act and its regulations (hereinafter called "the CEAA"), which could have environmental effects, CANADA will ensure that an environmental assessment of the project is conducted in accordance with the CEAA, before CIDA provides financial assistance for the purpose of enabling the project to be carried out. To that effect, the CEA as designated by CIDA will ensure that such assessment is conducted in accordance with the environmental assessment process enacted by the CEAA.

SECTION 7.02

The CEA will immediately provide CIDA with the screening report and all the records relating to the environmental assessment of the project (hereinafter called "the records") in order that CIDA may, as required by the CEAA, decide on a course of action. CIDA will place the records in the public registry kept in Canada as required by the CEAA.

SECTION 7.03

At the time the CEA provides CIDA with the records, and before they are placed in the public registry, the Philippines may request that a record or any part of a record be exempted under the CEAA, or be exempted under the Access to Information Act or the Privacy Act in effect in Canada.

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

SECTION 9.01

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:

Secretary
Department of Environment and Natural Resources
DENR Building
Visayas Avenue,
Diliman, Quezon City
Facsimile: 632-920-4352

FOR CANADA:

The President
Canadian International Development Agency
200 Place du Portage
Hull, Quebec
K1A OG4
Facsimile: 819-953-5469

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 and documents submitted to THE PHILIPPINES will be the English language and all communications and documents submitted to CANADA will be in either the 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 11.01

Differences which may arise in applying the provisions of this Memorandum 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 Annexes "A", "B", "C" and "D", which form an integral part hereof, constitute the entire understanding between THE PHILIPPINES and CANADA with respect to the Project. Annex "D" will be finalised and signed within one hundred and twenty (120) days from the date of the signature of the CEA contract.

SECTION 12.02

This Memorandum of Understanding may be amended as deemed necessary by THE PHILIPPINES and CANADA by exchange of letters.

SECTION 12.03

This Memorandum of Understanding will come into force and effect on the date of signature and will so remain for the duration of the Project.

Done in two copies, in Manila, this 5th day of August, 1997.

ANNEX "A"
PROJECT DESCRIPTION

GOAL:
To improve the management of the watershed ecosystems in Metro Cebu and Davao City.

PURPOSE

To strengthen anf enhance the capacity of Metro Cebu and Davao City to adopt innovative government, industry, and local community governance systems to address natural resource management problems affecting their respective watershed ecosystems.

EXPECTED RESULTS:

-Productivity and sustainability of watershed ecosystems in Cebu and Davao improved;

- Multi-sectoral, ecosystem approach to planning and managing environmental problems established;

-Mechanism to facilitate government, industry and local community collaborative solutions to environmental problems created;

-Capacity within local government units (LGUs) and regioanl offices of the Government of the Philippines developed;

-Canadian environmental expertise and technology to address envoronmental problems introduced during project implementation; and

-Long-term linkages between public and private sector stakeholders and Canadian suppliers of environmental expertise and technology developed.

LINK TO COUNTRY DEVELOPMENT POLICY FRAMEWORK (CDPF):

The proposed project is fully consistent with Canada's Official Developmen Assistance (ODA) priorities on environment, one of the six ODA priorities outlined in the federal government's official statement on foreign policy, Canada in the World. CIDA's 1992 policy for environmental sustainability recognised the importance of focusing on ecosystems, managing and protecting them in ways that maintain both their economic productivity and their ecological functions, sustaining the diversity of life in both human-managed and natural systems, and protecting the environmental quality of land, air and water from pollution. The Project will address all these concerns in the context of Metro Cebu and Davao City's ecosystems. Governance is the key; therefore the project is based on three philosophical and pragmatic principles: - ecosystem-based watershed management , - collaborative and integrated management, - and capacity building.

The project supports all three objectives of the Philippines CDPF: a) Promoting responsible governance; b) Building Philippines private sector capabilities; and c) Strengthening the capacity of democratic institutions.

DEVELOPMENT APPROACH:

The PCEEM project offers an unparalleled opportunity to apply an ecosystem-based watershed management approach to two geographic locations in the Philippines, Metro Cebu and Davao City. It is designed to enable the stakeholders make strategic interventions, via consensus building, in the restoration of, and prevention of environmental degradation, in the three watershed components: rural, urban and coastal.

The project will use the facilitation skills of the key decision-making organisations (government, NGOs, private sector, academic) and the technical expertise of Canadian partners in coming up with strategic interventions to address local environmental problems.

PROJECT MANAGEMENT AND ORGANISATION:

The Project will be overseen by an Executive Committee and the Metro Cebu and Davao City geographic components will be managed by two separate multi-stakeholder management boards reporting directly to the Executive Committee. The Executive Committee will be chaired by the Department of Environment and Natural Resources (DENR) and will include representatives from CIDA, National Economic and Development Authority (NEDA), Department of Trade and Industry (DTI) and the chairs of the two management boards in Cebu and Davao.

A Canadian Executing Agency (CEA) will be contracted to administer the project. The CEA, together with a local Project Director (DENR), will assume joint responsibility for the implementation of the project.

DURATION:

The project duration is five years. Actual project implementation is expected to start in the early part of 1998.

COST:

The total cost of the project is Cdn$10.7 million of which CIDA will contribute Cdn$9.2 million and DENR will contribute Cdn$1.5 million.

LOCATION:

The geographical focus of the project is Metro Cebu and Davao City.

ANNEX "B"

CANADA'S CONTRIBUTION

CIDA will be responsible for Canada's contribution to the project. It will:

-participate in the executive committee;

-contract a Canadian Executing Agency which will be responsible for the administration of the project;

-administer CIDA's contribution;

-monitor/appraise project progress.

ANNEX "C" PHILIPPINES CONTRIBUTION

DENR will facilitate the provision of GOP inputs, coordination and setting-up of project policies. It will undertake to:

-chair the project executive committee and provide secretariat support;

-designate a DENR project director as a counterpart to the Canadian project director;

-coordinate the participation of relevant sectors in the implementation of the project;

-allocate GOP in-kind and in-cash contributions to the project including office space, salaries, incentives, honoraria of counterpart staff and operating expenses;

-assist in obtaining foreign advisors stay permits, visas and customs clearance for eligible and documented project shipment entering the Philippines.

ANNEX "D"

MANAGEMENT PLAN

The Management Plan will be finalised and signed within one hundred and twenty (120) days from the date of the signature of the CEA contract. It will be attached hereto as Annex D when duly signed on behalf of CIDA and DENR.