ANGELES UNIVERSITY FOUNDATION

SCHOOL OF LAW
Angeles City, Pampanga

TREATIES AND
AGREEMENTS WITH
JAPAN
LEGAL RESEARCH

Submitted by:

Calica, Irene V.
Gorobao, Beatriz
Pineda, Kathlene P.

February 28, 2018

Professional School (PS307)
 METHODOLOGY
I. TREATIES AND AGREEMENT
Treaties and agreements, both multilateral (between several parties) and
bilateral (between two parties), between nations are two of the most important
tools in the arsenal of international diplomacy and problem solving. They
allow states to unite and overcome common challenges by legal principles.
Treaty is usually only binding on the parties to the agreement. An agreement
"enters into force" when the terms for entry into force as specified in the
agreement are met.
The Philippines has interacted and cooperated with neighboring countries and
the rest of international community through decades. The objectives of the
Philippines in entering to a treaty is enhancement of national security, the
pursuit of economic policy and the extension of full consular services to
Filipino nationals wherever they may be.
A treaty has the following elements: (1) An international agreement. To be a
treaty, an agreement has to have and international character. (2) Concluded
between states. A treaty is between states, governments, or their agencies, or
instrumentalities acting on behalf of states. A treaty may be conducted by
heads of states or governments, their ministries or other state agencies. (3) It
should be in written form (4) Governed by international law. This refers to the
element of intent to create obligation under international law. (5) Whether
embodied in a single instrument or in two or more related instruments.
Treaties can also be drawn up in less formal ways, such as through the
exchange of notes.
Among the agreements are a number of free trade agreements entered by the
Philippines and its ASEAN partners with the economies of major neighboring
countries, the Japan-Philippines Economic Partnership Agreement, the
Stockholm Convention on Persistent Organic Pollutants, arrangements for the
headquarters here of the ASEAN Centre for Biodiversity and the Worldfish

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 Centre, and the accessions to the Convention against Torture and the Protocol
Additional to the Geneva Conventions of 12 August 1949.
The president, as chief executive and head of state, has the power to conduct
foreign relations. This involves negotiating and entering into treaties. An
essential characteristic of diplomacy is it’s confidential in nature. The
president alone negotiates.
It is essential to identify the nature of the agreement in international law and
Philippines domestic law. Under international law, the agreement may be in
nature of a treaty or less formal memorandum of agreement, which creates
legally binding rights and obligations on the contracting parties or a
memorandum of understanding, which is non-legally binding instrument.
Executive Order No. 459 defines treaties as international agreements entered
into by the Philippines which require legislative concurrence after executive
ratification, while executive agreements are similar to treaties except that they
do not require legislative concurrence. Examples of agreements treated as
treaties are those that provide tax exemptions, because only Congress may
grant such exemption; grant privileges and immunities to individuals or
international organizations, except diplomatic immunities and privileges for
United Nations agencies and other international organizations which are by
now the norm; provide direct allocation of funds, as this prerogative is
exclusively lodged with Congress; and those that criminalize certain conduct,
as only the legislature may pass a penal legislation.
The distinction between treaties and executive agreements has no bearing in
the international law sphere. Both are covered by the term treaty as defined in
the Vienna Convention and thus equally binding.

http://210.5.104.56/treaty/treaty_law_and_practice.pdf
MAGSALIN NOTE

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II. TREATIES AND AGREEMENT WITH JAPAN
a. BEGINNING OF TREATY AND AGREEMENT BETWEEN
PHILIPPINES AND JAPAN

Japan Official Development Assistance (ODA) started as war reparations in

1954. It was based on a bilateral agreement between the Japanese and
Burmese governments. The San Francisco Peace Treaty stipulated what kind
of reparations would be given. The main purpose was to establish and help
develop new capitalist countries in Asia against the Soviet Unions.

The war preparations agreement provided that Japan shall give the
Philippines US $800 million as war reparations, $ 550 million of which shall
be in the form of donations of equipment and machinery, technical
assistance, training and others, and the remaining $250 million for loans to
private businesses.

Thus Japanese reparations were used for the realization of the global strategy
of the United States which included taking a key role in the development of
Asian markets. It was also a good opportunity for Japanese economic growth
after the WWII.

This was the beginning of the Japanese ODA to the Philippines.

The quantity of Japanese ODA increased rapidly since 1960. Having such an
increase, Japanese government officials could not handle all of their projects
operations and so Japanese government tapped the private firms to work for
their projects. Japan ODA then provided a big opportunity for Japanese
firms business and in reality, ODA provided Japanese companies business.
Eventually, these projects made better conditions and opportunities for the
business of Japanese
Firms in recipient countries.

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Since then, the typical cycle of the Japan ODA problem begun involving the
Japanese enterprises (trading corporations and development consulting
firms) that find or develop the aid projects , and foreign government officials
in a process of aid distribution that is often arbitrary and usually secret.

The War reparations agreement lasted for 20 years from 1956 to 1976. In
that period of time, the Philippines became a dumping ground for Japanese
equipment and machinery. In 1970, the Japanese Diet formulated a draft
revision of the war reparations agreement naming it the Philippine Japan
Treaty on Amity, Trade, Commerce, and Navigation. When the draft was
submitted to the Philippine Senate in 1971, it was thrown out because of its
glaring unfairness to the sovereignty and dignity of the Philippines. At the
same time, the national democratic movement called for the junking of the
unequal treaty with Japan as part of the overall struggle of the Filipino
people for national freedom, democracy , and social justice.

The Protest against the unequal treaty with Japan was short lived. When
Marcos declared Martial in 1972, it fell victim to the suppression campaign
by the dictatorship against the national democratic movement. But the
education and propaganda against the unequal treaty between the Philippines
and Japan continued in the underground. Marcos signed the Treaty on
Amity, Commerce, and Navigation in 1976 without the benefit of
Congressional Ratification.

After the downfall of the Marcos dictatorship, volumes of documents on

Japan ODA corruption deals came to light. As a result, a top-ranking officer
of the Japans Ministry of Foreign Affairs committed suicide. The series of
exposes that followed the suicide helped Japanese public to understand that
their taxes were being used in ODA projects for corruption and anti-people
activities by the Marcos dictatorship.

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During the period 1986 - 1996, Pres. Corazon Aquino came to power. The

United States initiated a so-called mini Marshall plan to help the ailing
Philippine economy left by Marcos. Named Philipine Aid Plan(PAP), the
US asked Japan play host to the pledging ceremony. Japan took the lead in
PAP and unveiled the CALABARZON program, a Japan International
Cooperation Agency ( JICA) designed regional development plan with
100% financing through Japan Overseas Economic Cooperation Fund (
OECF ). CALABARZON covers almost 10% of the total land area of the
Philippines. Under PAP, it was designated for land conversion from
agriculture to industrial and housing estates mainly for Japanese companies
and businesses.

The misuse of ODA Funds in the Philippines was still fresh in the minds of
the Japanese public, the CALABARZON project proposal drew the ire of
the progressive parliamentarians, NGOs Academe and citizens groups and
individuals. An Anti-Calabarzon Project campaign was launched.

In 1997, an International Fact Finding Mission ( IFFM) to the Pampanga

Delta Project ( PDDP ) launched, another Japan ODA funded project. In
1998, another anti-ODA related campaign , the Stop the San Roque Dam
Project, was initiated. This campaign highlighted the effects of Japanese
Investments on the livelihood of the people and the degradation of the
environment. In 1999, the Cebu-Bohol Anti- ODA Campaign highlighting
the ill effects of ODA was launched with the SPAN taking the lead. It aimed
to addressed the social and environmental costs of the massive ODA
projects, citing the dislocation of the 26,000 families in Cebu of their
livelihood and worsening their social and environmental conditions.

Forty years after Sen. Lorenzo Tanada had said that the war reparations
agreement would put the Philippine economy under Japanese control, his

5
words have become a reality. Japanese goods have flooded the Philippine
market.

For more than 50 years since Japan occupied the Phippines, its presence in
the domestic economy is still highly recognizable. The countrys former
aggressor is today our most important trading partner, next to the US. As of
April 2001, Japan is the second largest market of Philippine exports, worth $
377 million. It is also the countrys biggest supplier of foreign products worth
$581 million, according to a press release issued by the NSO.

The local economy hosts a myriad of Japanese transnational corporations (

TNCs ). In the SEC 2000 report, there are 189 Japanese TNCs in the
Philippines top 5,000 establishments. These TNCs registered combined
gross sales of Php 197 billion and profits of more than Php 3 billion.
Furthermore, as of January 2001, Japanese direct investments listed in the
Board of Investments ( BOI ) and the Philippine Export Zone Authority (
PEZA) total 2.78 Billion and Php 25 billion, respectively.

Apparently, the Philippines, along with many other Third World countries,
play a vital part in the global structure that serves Japans economic interests.
It is thus imperative for Japan to maintain its special relationship with these

countries to ensure that they continue to be useful to Japanﾕs economic

agenda. Among the most effective means to do this is through the official
development assistance or ODA.1

1
A Brief Historical Background. (n.d.). Retrieved February 24, 2018, from
http://www.geocities.jp/cbnetnagoya/update/historical.html

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 b. PURPOSE
The purposes of the Agreement are to promote a freer trans-border flow of
goods, persons, services and capital between Japan and the Philippines. The
Agreement also aims to promote a comprehensive economic partnership, which
includes intellectual property, competition policy, improvement of business
environment and bilateral cooperation in such fields as human resources
development, information and communications technology and small and
medium enterprises. After the conclusion of the Agreement, the Agreement is
expected to contribute to make the most of the complementary relations
between Japan and the Philippines and thus to strengthen even more the
existing bilateral economic relations.
Through the negotiations conducted, both sides benefited regarding trade in
goods, customs procedure, trade in services, investment, movement natural
person, cooperation, intellectual property, competition policy, mutual
recognition and business environment.2

2
JOINT PRESS STATEMENT. (n.d.). Retrieved February 24, 2018, from
http://www.mofa.go.jp/region/asia-paci/philippine/joint0411.html

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 III. Data Collection
Certified true copies were collected at Department of foreign affairs library at
Pasay City, Manila.

Department of Foreign Affairs

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Log in Sheet

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Calica – Gorobao – Pineda

Gate Pass

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DFA lobby

DFA library

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 IV. Limitations of the Study

There are different kinds of limitations encountered in this research.

It will then be discussed starting with the internal to external factors which
limited our study.
1. Incomplete records of the concerned Government Agency.
We have discovered that certain Treaties or Agreements are not available in
the Carlos P. Romula Library (Department of Foreign Affairs Library) for
only the other party of the Treaties or Agreement retained the copy for such.

2. There is no full discussion of the history or records of the Grants

....
3. The date of the Grants may be a deterrant
...
4. Financial ..
We may want to give a more broad and known Treaties or Agreements for
this assignment, however, given the cost per page of the documents it is just
not possible for us.
...

V. Data Gathering
Records or Documents Review
The Data Gathering Technique, or otherwise known as Data Collection
Technique, we used to acquire the records for the chosen Agreements was
through gathering Records or Documents.
Record or document review as defined involves systematic data collection
from existing records.

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Internal records available to a capacity builder might include financial
documents, monthly reports, activity logs, purchase orders, etc. The
advantage of using records from your organization is the ease of data
collection. The data already exists and no additional effort needs to be made
to collect it (assuming the specific data you need is actually available and
up-to-date).

If the data is available and timely, record review is a very economical and
efficient data collection method. If not, it is likely well worth the time to
make improvements to your data management system so you can rely on
internal record review for future outcome measurement work. Just a few
changes to an existing form can turn it into a useful data collection tool. A
small amount of staff training can increase the validity and reliability of
internally generated data.3

We searched the official website of the Department of the Foreign Affairs

for the Treaties and Agreements with Japan and we browsed among the
available records and choose 3 among from the given list.
We then made a request letter which was then signed by our Assistant Dean
of the School of Law of Angeles University Foundation and brought it with
us when we went to the Main Office of the said Government Agency to
request the chosen Agreements.
The processing for our request took 4 working days and then we were
informed that it is already available for pick up after payment.

3
Creating and Implementing a Data Collection Plan. (n.d.). Retrieved
February 24, 2018, from http://strengtheningnonprofits.org/resources/e-
learning/online/datacollection/

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Grant of Y427,000,000 of project for upgrading medical
equipment of the Philippine Heart Center.

Discussion of the treaty

Japan provides assistance to the Philippines. The Philippines is a
neighboring country, and has for many years maintained favorable relations
with Japan. Japan and the Philippines have a close relationship of
interdependence in trade and investment.

Since the latter half of the 1980s, the Philippines had achieved positive
results in structural economic reform under the guidance of the IMF. The
effects of the Asian economic crisis, however, served to slow down the
speed of economic growth, and there remains need for Philippine businesses
to increase their productivity and international competitiveness.

The Japan and Philippines went through some of treaty and agreement to
help each country that will benefit and improve their economic status. One
of this treaty is when the Japan, on 31 March 1989 help the Philippines
upgrading medical equipment of the Philippine heart center referred to as
“the project”. This will pursue if the Government of the Japan will provide
the grant amounted up to Y 427,000,000.

Under the health / medical equipment may be provided to a particular

medical organization e.g., hospital, medical research institute to improve the
delivery of its functions. There should be a close linkage between the
requested medical equipment and the activities of either a Japan
International Cooperation Agency expert. The proponent agency has an
established mechanism to effectively maintain and operate the medical
equipment as well as monitor the status of the donated equipment. The
indicative amount of medical equipment, which may be availed of under this
grant, is ¥427 million. The recipient agency is required to shoulder all
expenditures related to the equipment provided under the grant. The
expenditures include: (i) operation and maintenance costs; (ii) import duties
for donated equipment; (iii) value-added-tax (VAT) for locally procured
equipment and materials; and, (iv) inland transport cost of moving
equipment from unloading port to the proposed project site.
https://www.jica.go.jp/philippine/english/office/about/about01_03.html
http://www.ph.emb-japan.go.jp/bilateral/oda/aid.htm

History

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The Philippines is a neighboring country, and has for many years maintained
favorable relations with Japan. Japan and the Philippines have a close
relationship of interdependence in trade and investment. Since the latter half
of the 1980s, the Philippines has achieved positive results in structural
economic reform under the guidance of the IMF. The effects of the Asian
economic crisis, however, served to slow down the speed of economic
growth, and there remains need for Philippine businesses to increase their
productivity and international competitiveness.

http://www.ph.emb-japan.go.jp/bilateral/oda/aid.htm

Sponsorship
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 and products and services. Such contracts shall be verified
by the Government to be eligible for the Grant.

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 to an account to be opened 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.

The sole purpose of the account is to receive the payments in Japanese yen
by the Government of Japan and to pay the Japanese nationals who are
parties to the Verified contracts. The procedural details concerning the credit
to and debit from the account will be agreed upon through consultations
between the Bank and the Government of the Republic of the Philippines or
its designated authority.

I. Coverage
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 Japan or Philippine nationals which are
medical equipment and vehicles necessary for the installation and equipment

15
and services necessary for the transportation of the products referred to the
ports in the Republic of the Philippines and those for internal transportation.

II. Enactment
The enactment of the Grant will be available during the date of 31 March
1989. The Grant is signed by between Raul S. Maglapus secretary of
Department Foreign affairs of the Republic of the Philippines and Tsuneo
Tanaka Ambassador extraordinary and Plenipotentionary of Japan to the
Republic of the Philippines.

III. Implementation
The effect of this Grant the Government of the Republic of the Philippines
will take necessary measures: to secure a lot of land necessary for the
construction of the Facilities; to provide facilities for distribution of
electricity, water supply and drainage and other incidental facilities, to
ensure prompt unloading and custom clearance at ports of disembarkation in
the Philippines; to exempt Japanese nationals from custom duties internal
taxes and other fiscal levies which may be imposed in the Republic of the
Philippines with respect to the supply of the products and services; to accord
Japanese nationals whose services may be required in connection with
supply of the products and services under the Verified contracts such
facilities may be necessary for their entry into The Republic of the
Philippines and stay for the performance of their work; to ensure that the
facilities constructed and to bear all the expenses other than covered by the
Grant.

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

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

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GRANT OF Y366,000,000 OF THE EXPANSION PROJECT
FOR PROGRAM III OF THE PHILIPPINE HUMAN
RESOURCES DEVELOPMENT CENTER.

I. Discussion of the treaty

Philippine-Japan cultural relations, an ever growing and ever improving
field in Philippine foreign relations, has been found to undergird the two
countries' growing economic relations.

This treaty is about the discussion 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 Government of Japan will contribute grant up to three hundred sixty six
million yen (Y366,000,000) to the execution of the expansion project for
Program III of the Philippine Human Resources Development Center by the
Government of the Republic of the Philippines in accordance with the
relevant laws and regulations of Japan.

The purpose of this treaty can be greatly seen from the Executive Order no.
785 for the creation of the Philippine Human Resource Development Center.

In the said Executive Order, it provides for the following:

1. There is hereby created the Philippine Human Resource Development

Center, hereinafter referred to as the “Center”, to be the recipient in behalf of
the Government of the Philippines, of the Japanese grant aid for human
resources development. All matters pertaining to this ASEAN-Japan project
will be communicated to the Japanese government through the Ministry of
Foreign Affairs.

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2. The Center shall be in the University of Life, Ministry of Human
Settlements.

3. The Center shall have the following functions:

a. Ensure that human resources development efforts are productively applied

to new and existing enterprises;

b. Strengthen established infrastructure for training related to human

resources development and to effect the networking of such existing training
facilities;

c. Encourage training curricula and programs responsive to industry’s

demands;

d. Source and negotiate for training opportunities with Japan and with other
ASEAN countries as a means of enhancing technical cooperation and
technology transfer; and

e. Provide and facilitate information flow not only among local training
agencies but also with Japan and other ASEAN countries.

4. The Center shall have a Governing Council to serve as its policy-making

body.

5. The Center shall have a Joint Steering Committee composed of the

Secretary-General, representatives of the lead agencies involved in the
Center programs, NEDA, as well as Japanese experts involved in the
projects, officials from the Japanese Embassy and/or Japan International
Cooperation Agency (JICA).

The Joint Steering Committee shall perform the following functions:

a. To assist the Governing Council in reviewing and recommending the

annual Programs plans, including budget allocation of the Center; and

b. To facilitate effective implementation of the Programs through close

consultations and coordination with the Philippine and Japanese sides.

6. The Center shall have an Office of the Secretary-General. The Secretary-

General shall be appointed by the Governing Council and shall act as the
chief executive officer of the Center under the Joint Steering Committee.

The Secretary-General shall perform the following functions:

a. To supervise Program I of the Center;

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b. To coordinate Programs II, III, IV and V of the Center; and

c. To direct the activities of the Center.

7. Technical assistance forthcoming for the development of human resources

shall be directed towards the development of skills and the
commercialization of technologies particular to the following priority
Programs and other non-traditional areas as may be identified from time to
time by the Governing Council:

a. Program I – Center Support Activities

b. Program II – Seafarming
c. Program III – Non-Traditional Crops
d. Program IV – Cottage and Light Industries
e. Program V – Shelter and Construction Manpower

8. The grant aid from the Government of Japan to the Center, to the extent
that it takes the form of financial assistance or assistance-in-kind that can be
easily converted into cash, shall be placed in a special account in any
government depository bank to be administered by the Center and utilized
for its programs and projects.

9. In order to provide the Peso Counterpart for the operating requirements of

the Center, the Ministry of the Budget shall annually appropriate and
program the amount of Five Million Pesos (P5,000,000) from the Foreign
Assisted Projects Support Fund.4

II. History
The Philippines and Japan have had a long history of diplomatic relations,
dating back as early as 1889.5

4
Executive Order No. 785, s. 1982 | GOVPH. (n.d.). Retrieved February 24,
2018, from http://www.officialgazette.gov.ph/1982/03/19/executive-order-
no-785-s-1982/

5
Diplomatic relations between the Philippines and Japan | GOVPH. (n.d.).
Retrieved February 24, 2018, from
http://www.officialgazette.gov.ph/diplomatic-relations/japan/

19
The Philippines was occupied by Japan for almost 3 years during the World
War II in the 1940s. During this period, the Japanese military authorities
organized a new government structure – often referred to as a "puppet
government" – under which a number of Filipinos served.

The two countries have gone a long way from the wartime period – when at
least 7,000 soldiers died in the Bataan Death March alone – and have since
established a relationship based on cooperation and mutual trust.

Several factors accounted for the change in the state of cultural affairs and
social relations between the two countries. Japanese presence in the
Philippines -just like perhaps in other ASEAN member-states- fits nicely
with the latter countries' needs. Its economic penetration of the region, for
instance, coincided with the Philippines' and perhaps her ASEAN partners'
requirements for additional factors needed to push their economic growth
and development performance upwards.

Such performance perforce served as a basis of social and political stability.

To illustrate this, firstly, Japan's needs for raw materials for its industries and
markets for her industrial goods are matched by Southeast Asia's search for
markets of its commodity exports, and a constant source of financial and
technological resources. 6

Secondly, other Southeast Asian goals outside of domestic economic and

political stability in the 1960s and beyond have been pursued. Both sides
conducted several consultations to reach to an agreement. The DND along
with the Department of Foreign Affairs (DFA) worked closely with Japan’s
Ministry of Foreign Affairs (MOFA) and its Ministry of Defense.

6
Gavilan, J. (n.d.). FAST FACTS: PH-Japan relations through good and bad
times. Retrieved February 24, 2018, from
https://www.rappler.com/newsbreak/iq/120183-fast-facts-philippines-japan-
relations

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The Philippines is the first ASEAN country with which Japan has concluded
such agreement. Both states are optimistic that tangible cooperation will be
drawn up in accordance with the said agreement. This agreement between
Japan and Philippines will benefit each country at the year of 1988 and in
the future.7
III. Sponsorship
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 and products and services. Such contracts shall be verified
by the Government to be eligible for the Grant.
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 to an account to be opened 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.
The sole purpose of the account is to receive the payments in Japanese yen
by the Government of Japan and to pay the Japanese nationals who are
parties to the Verified contracts. The procedural details concerning the credit
to and debit from the account will be agreed upon through consultations
between the Bank and the Government of the Republic of the Philippines or
its designated authority.
IV. Coverage
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 Japan or Philippine nationals which are

7
The Philippines, Japan sign defense agreement | GOVPH. (n.d.). Retrieved
February 24, 2018, from http://www.officialgazette.gov.ph/2016/03/03/ph-
jp-sign-defense-agreement/

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products and services necessary for the construction of a dormitory and other
supplementary facilities for Program III if the Philippines Human Resources
Development Center and the renovation of the existing facilities; equipment
and a vehicle for transport necessary for the execution of the Project and
services necessary for the installation of the equipment; and services
necessary for the transportation of the products referred above to ports in the
Republic of the Philippines, and those for internal transportation.

V. Enactment
The Grant will be made available during the period between the date of
coming into force of the present arrangements and 31 March 1989, unless
the period is extended by mutual agreement between the authorities
concerned of the two Governments. The Grant is signed by between Raul S.
Maglapus secretary of Department Foreign affairs of the Republic of the
Philippines and Tsuneo Tanaka Ambassador extraordinary and
Plenipotentionary of Japan to the Republic of the Philippines.

VI. Implementation
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 the 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 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 (hereinafter referred
to as "the Bank").

The payments referred to in sub-paragraph above will be made when

payment requests are presented by the Bank to the Government of Japan

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under an authorization to pay issued by the Government of the Republic of
the Philippines or its designated authority.

The sole purpose of the account re£ erred to in sub-paragraph above is to

receive the payments in Japanese yen by the Government of Japan and to
pay to the Japanese nationals who are parties to the Verified Contracts. The
procedural details concerning the credit to and debit from the account will be
agreed upon through consultation between the Bank and the Government of
the Republic of the Philippine or its designated authority.

The effect of this Grant the Government of the Republic of the Philippines
will take necessary measures: to secure a lot of land necessary for the
construction of the Facilities; to provide facilities for distribution of
electricity, water supply and drainage and other incidental facilities, to
ensure prompt unloading and custom clearance at ports of disembarkation in
the Philippines; to exempt Japanese nationals from custom duties internal
taxes and other fiscal levies which may be imposed in the Republic of the
Philippines with respect to the supply of the products and services; to accord
Japanese nationals whose services may be required in connection with
supply of the products and services under the Verified contracts such
facilities may be necessary for their entry into The Republic of the
Philippines and stay for the performance of their work; to ensure that the
facilities constructed and to bear all the expenses other than covered by the
Grant.
The products purchased under the Grant shall not be re-exported from the
Republic of the Philippines.

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

23
24