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May 28, 1984

Excellency,

I have the honour to refer to the recent discussions held between the representatives of the Government of Japan and of the Government of the Republic of the Philippines concerning Japanese economic cooperation to be extended with a view to strengthening friendly and cooperative relations between the two countries, and to propose on behalf of the Government of Japan the following arrangements:

1. For the purpose of contributing to the execution of the Project for the Construction of the Baguio City Sewage Treatment Plant (hereinafter referred to as "the Project") by the Government of the Republic of the Philippines3 the Government of Japan will extend to the Government of the Republic of the Philippines, in accordance with the relevant laws and regulations of Japan, a grant up to One Billion Five Hundred and Seventy Six Million Yen (¥1,576,000,000) (hereinafter referred to as "the Grant").

2. The Grant will be made available during the period between the date of coming into force of the present arrangements and March 31, 1985, unless the period is extended by mutual agreement between the authorities concerned of the two Governments.

3. (1) The Grant will be used by the Government of the Republic of the Philippines properly and exclusively for the purchase of the products of Japan or the Philippines and the services of Japanese or Philippine nationals listed below: (The term nationals whenever used in the present arrangements means Japanese physical persons or Japanese juridical persons controlled by Japanese physical persons in the case of Japanese nationals, and Philippine physical or juridical persons in the case of Philippine nationals.)

(a) products and services necessary for the construction of facilities for sewage treatment and supplementary facilities (hereinafter jointly referred to as "the Facilities of the Plant");

(b) equipment, necessary for the Facilities of the Plant and services necessary for the installation of the equipment therein; and

(c) services necessary for the transportation of the products referred to in (a) and (b) above to ports in the Republic of the Philippines and those for internal transportation therein.

(2) Notwithstanding the provisions of sub-paragraph (1) above, when the two Governments deem it necessary, the Grant may be used for the purchase of the products of the kind mentioned in (a) and (b) of sub-paragraph (1) above, which are products of countries other than Japan or the Philippines and the services of the kind mentioned in (a), (b) and (c) of sub-paragraph (l) above, which are services of nationals of I . countries other than Japan or the Philippines.

4. The Government of the Republic of the Philippines or its designated ; authority will enter into contracts in Japanese yen with Japanese nationals for the purchase of the products and services referred to in paragraph 3< Such contracts shall be verified by the Government of Japan to be eligible for the Grant,

5. (l) The Government of Japan will execute the Grant by making payments in Japanese yen to cover the obligations incurred by the Government of the Republic of the Philippines or its designated authority under the contracts verified in accordance with the provisions of paragraph 4 (hereinafter referred to as "the Verified Contracts") to an account to be opened respect to the supply of the products and services under the Verified Contracts;

(e) to accord Japanese nationals whose services may be required in connection with the supply of the products and services under the Verified Contracts such facilities as may be necessary for their entry into the Republic of the Philippines and stay therein for the performance of their work;

(f) to ensure that the Facilities of the Plant constructed and the equipment purchased under the Grant be maintained and used properly and effectively for the execution of the Project; and

(g) to bear all the expenses, other than those covered by the Grant^ necessary for the execution of the Project.

(2) The products purchased under the Grant shall not be re-exported from the Republic of the Philippines.

7. The two Governments will consult with each other in respect of any matter that may arise from or in connection with the present arrangements .

I have further the honour to propose that this Note and Your Excellency's Note in reply confirming on behalf of the Government of the Republic of the Philippines the foregoing arrangements shall be regarded as constituting an agreement between the two Governments^ which will enter into force on the date of Your Excellency's reply.

I avail myself of this opportunity to renew to Your Excellency the assurance of my highest consideration.

(Sgd.)YOSHIO OKAWA

Ambassador Extraordinary and Plenipotentiary of Japan to the Republic of the Philippines

HIS EXCELLENCY MANUEL COLLANTES

Acting Minister for Foreign Affairs

Ministry of Foreign Affairs