Supreme Court E-Library
Information At Your Fingertips

December 18, 1995

With a view to strengthening the ties of friendship and cooperation which bind them, the Government of the Republic of the Philippines and the Government of the French Republic have agreed to conclude the present protocol to foster the economic development of the Philippines.

ARTICLE 1 - EXTENT AND PURPOSE OF FINANCIAL SUPPORT

The Government of the French Republic grants the Government of the Republic of the Philippines financial support designed to finance projects included in the economic development priorities of the Republic of the Philippines. The said support shall not exceed 162.051 MFF (ONE HUNDRED AND SIXTY TWO MILLION FIFTY ONE THOUSAND FRENCH FRANCS) and shall be used to finance the purchase of French goods and services related to the implementation of projects listed in the annexes A and B herein.

For each project, the Philippine Government can decide that the financial support from the French Government shall be provided directly to a Government agency or corporation of its choice.

ARTICLE 2 - BREAKDOWN OF FINANCE PACKAGE

The financial support provided in Article 1 hereof shall comprise :

- a grant from the French Treasury of an amount not exceeding 2.021 MF;

- a loan from the French Treasury of a total amount not exceeding 96.018 MF;

- private credits guaranteed by the French credit insurance agency (COFACE) of a total amount not exceeding 64.012 MF.

ARTICLE 3 - MECHANISMS OF FINANCIAL SUPPORT

a) The financing of the projects referred to in annex A hereto shall be provided by the French Treasury grant. The first instalment shall be between 10% and 20% of the amount of each contract.

b) The financing of the projects referred to in annex B hereto shall be provided jointly by the French Treasury loan and the guaranteed credits. Each contract of goods and services shall give drawing rights on the French Treasury loan and the guaranteed credits equal to 60 % and 40 % respectively of the total value of the contract financed by the present protocol. The French Treasury loan shall be used to fully finance the first instalment which shall amount to between 10% and 20 % of the value of the contract. The French Treasury loan and guaranteed credits - used simultaneously -shall finance the remainder of the value of each of the aforesaid contracts.

ARTICLE 4 - CONDITIONS GOVERNING FINANCIAL SUPPORT

The French Treasury loan shall be granted for a period of 25 years, including a grace period of 6 years. The interest rate shall be 1.5 % per annum. Said loan shall be repaid in 38 equal consecutive six-monthly instalments, the first instalment falling due 78 months after the end of the calendar quarter during which each drawing is made. Interest shall be payable on the total amount disbursed and outstanding; it shall be applicable as of the date of each drawing on the French Treasury loan and shall be paid at six-monthly intervals.

For each project, an agreement between Credit National, acting in the name and on behalf of the Government of the French Republic and either the governmental agency or corporation designated by the Government of the Republic of the Philippines to receive the French financial support and guaranteed by the Government of the Republic of the Philippines or the Department of Finance of the Philippines acting in the name and on behalf of the Government of the Republic of the Philippines, shall define the mechanisms of utilisation of the French treasury grant for the projects referred to in annex A and the mechanisms of utilisation of the French Treasury loan and repayment of the said loan for the projects referred to in annex B of the present protocol.

The guaranteed credit shall be granted for a period of 10 years and shall be repaid in 20 equal, consecutive six-monthly instalments.

For each project listed in annex B herein an agreement between the banks approved in France, under the care of AFB-Export and either the governmental agency or corporation designated by the Government of the Republic of Philippines to receive the French financial support and guaranteed by the Government of the Republic of Philippines or the Department of Finance of the Philippines acting in the name and on behalf of the Government of the Republic of the Philippines, shall define the mechanisms of application and repayment of the said credit. It shall be stipulated in the said agreement that the interest rate (s) applicable shall be the normal interest rate (s) on the currency concerned on the date of signature of the contract. The said agreement shall also stipulate the maximum time limit between the signature of the contract and the starting date for repayment of the guaranteed credit. The insurance credit premium shall be paid by the borrower.

When the financial facilities are granted directly to a governmental agency or a corporation guaranteed by the Government of the Republic of the Philippines, the conditions of exercise of this guaranty shall be those specified in the present protocol and in the agreements hereabove mentioned.

ARTICLE 5 - CURRENCY OF ACCOUNT AND PAYMENT

The currency of account and payment of the contracts to be financed under the present protocol will be the French franc.

ARTICLE 6 - IMPLEMENTATION DEADLINE AND EXPIRY DATE OF THE FRENCH FINANCING

In order to qualify for the financial support provided in Article 1 hereof, contracts must be concluded by June 30, 1997 at the latest, and the final decision for qualification for financing under the terms of the present protocol will have to be made three months after this date at the latest.

No drawing on the French Treasury financing provided by the present protocol shall be made after June 30, 2000. This date shall not be extended except by special agreement between the two Governments in the event of exceptional difficulties.

ARTICLE 7 - FREIGHT AND INSURANCE

Freight and insurance are considered as French services when :

- freight is provided under a bill of lading issued by a French shipping company or under an airway bill issued by a French air-freight company, and is certified by the French appropriate authorities as being a French service;

- insurance cover is taken out with approved companies on the French market.

ARTICLE 8 - CONTRACTS COVERED

The final decision on whether contracts related to the projects referred to in the annex A herein qualify for financial support under the terms of the present protocol shall be made by exchange of letters between the National Economic and Development Authority and the Economic and

Commercial Counsellor to the French Embassy in Manila acting with the authorization of the competent French authorities.

The final decision on whether contracts related to the projects referred to in the annex B herein qualify for financial support under the terms of the present protocol shall be made by exchange of letters between the Department of Finance of the Philippines and the Economic and Commercial Counsellor to the French Embassy in Manila acting with the authorization of the competent French authorities.

These decisions will depend on the guarantee that the total amount needed for each project is available.

For each project the final decision will require prior evaluation by the French authorities and, in case of projects referred to in annex B, will be subject to the conformity of the project with the rules established by the participants to the OECD consensus.

In case of arrears related to French Treasury loans, no final positive decision on this financial protocol will be possible.

ARTICLE 9 - TAXATION

The payments of principal and interest due on the French Treasury loan provided by the present protocol shall not be liable to any taxation, whatsoever, by the Government of the Republic of the Philippines. The grant from the French Treasury shall not be used to finance any tax.

ARTICLE 10 - APPRAISAL OF PROJECTS

The Government of the French Republic may proceed at its own expenses to undertake post evaluation of the projects financed under this protocol in order to gauge their impact on the economic development of the Philippines. The Government of the Republic of the Philippines could, should it so wish, participate in this evaluation in order to benefit directly from its findings. The Government of the Republic of the Philippines agrees to welcome such appraisal mission sent by the Government of the French Republic and to facilitate its access to relevant information about the projects.

ARTICLE 11 - DATE OF EFFECT

The present protocol shall come into force on the date of its sealing.