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December 20, 1996

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 the supply of sound equipment (hereinafter referred to as "the Equipment") to the Cultural Center of the Philippines, and to propose on behalf of the Government of Japan the following arrangements:

1.For the purpose of contributing to the promotion of cultural activities in the Republic of the Philippines, 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 forty-seven million and four hundred thousand yen (¥47,400,000) {hereinafter referred to as "the Grant").

His Excellency Domingo L. Siazon, Jr.
Secretary of Foreign Affairs
Department of Foreign Affairs
Republic of the Philippines

2.(1) The Grant will be used by the Government of the Republic of the Philippines properly and exclusively for the purchase of the Equipment, which will be products of Japan or the Republic of the Philippines, and of services relating to procurement of such products, including the transportation of the Equipment to ports in the Republic of the Philippines.

(2) Notwithstanding the provisions of sub-paragraph (1) above, when the two Governments deem it necessary, the Equipment which will be products of countries other than Japan or the Republic of the Philippines may be purchased under the Grant.

3.The Grant will be made available during the period between the date of coming into force of the present arrangements and March 31, 1997, unless the period is extended by mutual agreement between the authorities concerned of the two Governments.

4.(1) The Government of the Republic of the Philippines or its designated authority will enter into contracts in Japanese yen with Japanese nationals or Japanese juridical persons controlled by Japanese nationals for the purchase of the Equipment and services referred to in paragraph 2. Such contracts shall be verified by the Government of Japan to be eligible for the Grant.

(2) The Government of the Republic of the Philippines or its designated authority will open through banking arrangements an account to be used only for the purpose of the implementation of the Grant, in the name of the Government of the Republic of the Philippines in an authorized foreign exchange bank of Japan designated by the Government of the Republic of the Philippines or its designated authority.

(3) The Government of Japan will make payments in Japanese yen to cover the obligations incurred by the Government of the Republic of the Philippines or its designated authority under the verified contracts referred to in sub-paragraph (1) above to the account referred to in sub-paragraph (2) above, when payment requests are presented by the bank referred to in sub-paragraph (2) above to the Government of Japan under an authorization to pay issued by the Government of the Republic of the Philippines or its designated authority.

5.(1) The Government of the Republic of the Philippines will take necessary measures:

(a) to ensure prompt unloading and customs clearance at ports of disembarkation in the Republic of the Philippines and internal transportation therein of the Equipment;

(b) to exempt Japanese nationals or Japanese juridical persons controlled by Japanese nationals from customs duties, internal taxes and other fiscal levies which may be imposed in the Republic of the Philippines with respect to the supply of the Equipment and services under the Grant;

(c) to ensure proper and effective maintenance and use of the Equipment; and

(d) to bear all the expenses, other than those covered by the Grant, necessary for the implementation of the Grant.

(2) With regard to the shipping and marine insurance of the Equipment purchased under the Grant, the Government of the Republic of the Philippines will refrain from imposing any restrictions that may hinder fair and free competition among the shipping and marine insurance companies

6.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 the present 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.

Appendix

Scope of the Agent's Services

1.Preparation of the list of the products to be tendered (hereinafter referred to as "the Equipment") on the basis of the request which was submitted in a written form to the Embassy of Japan in the Republic of the Philippines by the Government of the Republic of the Philippines or its designated authority.

2.Surveying the cost and specifications of the Equipment and determining the ceiling price of the tender.

3.Preparation of the draft of tender documents which include terms and conditions of the tender and the technical specifications.

4.Making the public notice of the tender and distributing the tender documents.

5.Assisting the Government of the Republic of the Philippines or its designated authority to open tender at the office of the Agent in the presence of the representatives of the tenderers and to evaluate the tender and to determine the successful tenderer.