Treaty (6 June 1985)

June 06, 1985

AGREEMENT BETWEEN THE GOVERNMENT OF THE REPUBLIC OF THE PHILIPPINES AND THE GOVERNMENT OF THE FEDERAL REPUBLIC OF GERMANY ON THE CONSOLIDATION OF PHILIPPINE DEBT, ARISING FROM CREDITS CONNECTED WITH GERMAN SUPPLIES AND SERVICES

The Government of the Republic of the Philippines and the Government of the Federal Republic of Germany On the basis of the Agreed Minute on the Consolidation of the Debt of the Republic of the Philippines, signed in Paris on 20 December 1984, In implementation of Article 1 of the Basic Agreement between the Government of the Republic of the Philippines and the Government of the Federal Republic of Germany on the Consolidation of the External Debt of the Republic of the Philippines, signed at the same time as this Agreement, Have agreed as follows:

ARTICLE 1

(1) The transfer of the amounts in payment of the following claims guaranteed by the Federal Republic of Germany and arising from contracts concluded before 1 April 1984 between German creditors and Philippine debtors shall be deferred in accordance with the provisions of this Agreement:

(a) Contractual instalments on principal and interest up to the contractual due date which result from credits allowed by suppliers and from financial credits tied to German supplies and services and which have fallen or fall due between 1 January 1985 and 30 June 1986 and have not been or are not paid:

(b) Contractual instalments on principal and interest up to the contractual due dates which result from credits allowed by suppliers and from financial credits tied to German supplies and services and which fell due up to 31 December 1984 and are unpaid.

(2) The amounts of the claims specified in paragraph (1) above and the contractual due dates of these amounts agreed between the German creditors and the Philippine debtors are detailed in schedules of maturity according to the status as per 5 June 1985. The contractually-agreed interest instalments are reduced by the amounts in tax which the Republic of the Philippines imposes on these claims in conformity with the Agreement of 22 July 1983 between the Federal Republic of Germany and the Republic of the Philippines for the Avoidance of Double Taxation with respect toTaxes on Income and Capital, unless the Philippine debtor has to pay this tax. The amounts of the claims are combined in totals in accordance with the schedules of maturity. The totals of the claims specified in paragraph (1) (a) above appear in Annex 1; the totals of the claims specified in paragraph (1) (b) above appear in Annex 2.

(3) The sum total of the claims specified in paragraph (1) (a) above shall not exceed: - DM 42 (forty-two million seven hundred and fifty thousand two 750,209.03 hundred and nine Deutsche Mark and three pfennigs); - US (seventeen million four hundred and twenty-seven thousand $17,427,138.55 one hundred and thirty-eight US dollars and fifty-five cents). The sum total of the claims specified in paragraph (1) (b) above shall not exceed: (twenty million nine hundred and thirty-nine thousand five - DM hundred and thirty-six Deutsche Mark and eighty-two 20,939,536.82 pfennigs); - US (seven million four hundred and seventy-eight thousand $7,478,035.98 thirty-five US dollars and ninety-eight cents).

ARTICLE 2

(1) The claims listed in Article 1 shall be repaid as follows:

(a) the instalments on principal specified in Article 1 paragraph (1) (a) and 60 per cent of the instalments on interest specified therein - in ten equal half-yearly instalments, beginning on 15 March 1991 and ending on 15 September 1995; of the remaining 40 per cent of the instalments on interest specified in Article 1 paragraph (1) (a) - one third shall be paid on the original contractual due date, - one third on 15 September 1986, and - one third on 15 September 1987;

(b) of the claims specified in Article 1 paragraph (1) (b) - 25 per cent shall be paid on 15 June 1985 - 25 per cent on 15 December 1985, and - 50 per cent on 15 June 1986.(2) The Government of the Republic of the Philippines shall assume the payment obligations pursuant to paragraph (1) above for the claims listed in Article 1 in respect of which the Republic of the Philippines or one of its organisations, institutions, or companies is debtor or guarantor. The Central Bank of the Philippines shall assume the payment obligations pursuant to paragraph (1) above for the liabilities listed in Article 1 of the private Philippine debtor to the extent the private Philippine debtor has deposited with the Central Bank of the Philippines the equivalent in Philippine Pesos of the respective claims at the rate of exchange valid in the Republic of the Philippines on the date of deposit. In turn, the corresponding payment obligations of the Central Bank of the Philippines shall be assumed by the Government of the Republic of the Philippines. To this end, the Government of the Republic of the Philippines shall enable the Philippine debtor to deposit, in accordance with Circular No. 1045 or other issuances, the equivalent, in Philippine Pesos of the claims listed in Article 1 at the above-mentioned rate of exchange. The equivalent of claims in respect of which the Republic of the Philippines or one of its organisations, institutions or companies is debtor or guarantor shall be deemed to have been deposited on the contractually-agreed due date.

(3) If a private Philippine debtor has, in whole or in part, not yet deposited the equivalent in Philippine Pesos of one of the claims listed in

Article 1 or if he fails to deposit such equivalent by the due date, the

Government of the Republic of the Philippines shall enable the private Philippine debtor to effect such deposit by 30 June 1987. If a private Philippine debtor has not, within 3 months after the contractual due date, deposited with the Central Bank of the Philippines the equivalent in Philippine Pesos of the claim, the Central Bank of the Philippines shall issue a written request to the private Philippine debtor to effect the deposit without delay.

(4) Payments pursuant to paragraph (1) above shall be made in Deutsche Mark. If payment in US Dollars has been agreed between the German creditor and the Philippine debtor, the US Dollar amount the equivalent of which has been deposited in Philippine Pesos shall be converted to Deutsche Mark at the officially-quoted middle rate of exchange at the Frankfurt Exchange on the date of deposit. If no official exchange rate is fixed on that date, the officially-quoted middle rate of exchange as last fixed before that date shall apply.

(5) If the German creditor has, in whole or in part, directly received payment of one of the claims listed in the Annexes, the obligations pursuant to paragraph (1) above shall cease to apply accordingly.

ARTICLE 3

(1) Annual interest amounting to 8% (eight per cent) (consolidation interest) shall be paid, in Deutsche Mark, on the outstanding amounts tobe transferred pursuant to Article 2. The obligation to pay consolidation interest shall begin, in each case, on the date of the deposit with the Central Bank of the Philippines of the equivalent in Philippine Pesos of the respective claim and shall end in each case on the date on which the transferred amount is credited to the bank account of the Consortium designated in Article 6 or, in the case of Article 2 paragraph (5), on the date on which payment is received by the German creditor.

(2) The consolidation interest shall be paid as follows: - for the period ending on 30 June 1985: on 15 July 1985; - for the period beginning on 1 July 1985: on 31 December and 30 June of each year for the half-year then ending.

(3) Consolidation interest pursuant to paragraphs (1) and (2) above shall be paid for the period of time between the due date contractualy agreed between this German creditor and the private Philippine debtor and the date of deposit with the Central Bank of the Philippines of the equivalent in Philippine Pesos of a claim listed in Article 1. Such payments shall be made to the extent the private Philippine debtor has deposited with the Central Bank of the Philippines the equivalent in Philippine Pesos of the consolidation interest accumulated for that period of time. Deposits in Philippine Pesos effected by the private Philippine debtor, the equivalent of which has not been transferred in Deutsche Mark shall be credited as follows: - First towards claims listed in Article 1; - then towards consolidation interest pursuant to this paragraph irrespective of which claim matured first.

ARTICLE 4

(1) The annual interest rate stipulated in Article 3 paragraph (1) shall be increased on outstanding transfer instalments pursuant to Article 2 paragraph (1) as of the due date of the transfer instalment by 1% (one per cent). Such increase shall not apply where the transfer delay amounts to less than fourteen calendar days.

(2) If consolidation interest pursuant to Article 3 is not paid on the due date under this Agreement, interest pursuant to Article 3 paragraph (1) shall be paid on the amount of consolidation interest in arrears as of the due date thereof unless the delay amounts to less than fourteen calendar days.(3) Payments made in accordance with this Agreement shall be credited towards the consolidated debt amount in the following order: - First towards interest payable on consolidation interest in arrears pursuant to paragraph (2) above; - then towards consolidation interest pursuant to paragraph (1) above; - then towards current consolidation interest pursuant to Article 3; - then towards consolidation interest in arrears pursuant to paragraph (2) above; - finally towards transfer instalments pursuant to Article 2 in the order of their due dates.

(4) Payments pursuant to paragraphs (1) to (3) above and Articles 2 and 3 shall be made in Deutsche Mark on their due dates under this Agreement without any deduction being made for taxes, fees or other public charges or for any other costs. The place of performance shall be Hamburg.

(5) The Government of the Republic of the Philippines shall ensure that certificates suitable for submission to the German tax authorities shall be issued in respect of amounts of tax which the Republic of the Philippines, in accordance with the provisions of the Agreement of 22 July 1983 between the Federal Republic of Germany and the Republic of the Philippines for the Avoidance of Double Taxation with respect to Taxes on Income and Capital, levies on claims listed in Article 1. These certificates shall be submitted, upon request, directly to the German creditor.

ARTICLE 5

If the Government of the Republic of the Philippines does not fulfill the conditions set forth in Section IV paragraph (3) of the Agreed Minute on the Consolidation of the Debt of the Republic of the Philippines, signed in Paris on 20 December 1984, or if payments under this Agreement are not made, or are not made in full, by the due date or if any other obligations arising from this Agreement are not met, the Contracting Parties shall enter into consultations. These consultations shall commence within thirty calendar days after the Government of the Federal Republic of Germany has proposed this to the Government of the Republic of the Philippines. If within a period of thirty calendar days consultations are not taken up or fail to result in a settlement acceptable to both parties, the Government of the Federal Republic of Germany shall be entitled to suspend the implementation of this Agreement and to require immediate payment of all the amounts to be transferred under this Agreement, including accrued consolidation interest. ARTICLE 6(1) The implementation of the deferment of transfer pursuant to this Agreement shall be entrusted - by the Government of the Federal Republic of Germany to a Consortium consisting of HERMES Kreditversicherungs- Aktiengesellshcaft, Hamburg und Berlin, and TREUARBEIT Aktiengesellshcaft Wirtschaftsprufungsgesellshcaft Steuerberatungsgesellschaft, Frankfurt am Main und Berlin; - by the Government of the Republic of the Philippines to the Central Bank of the Philippines, Manila.

(2) Deferment of transfer shall be effected on the basis of confirmations of deposit the Central Bank of the Philippines shall issue to the Consortium in respect of the claims referred to in Article 1. The confirmations of deposit shall include the dates of the maturities contractually agreed between the German creditor and the Philippine debtor, the deposited amounts converted into the contractually-agreed currency and the dates of deposit with the Central Bank of the Philippines. The confirmations of deposit shall be issued for the individual claims listed in the schedules of maturity referred to in Article 1 paragraph (2). If the Central Bank of the Philippines has issued a telex confirmation of deposit, followed by a confirmation, in writing, of that deposit for a claim even though the conditions required for doing so have not been met, such deposit shall be deemed to have been made within the meaning of this Agreement on the notified date unless the Central Bank of the Philippines withdraws the confirmation of deposit within twenty calendar days after receipt of the telex by the Consortium. In those cases where the confirmations of deposit are issued upon the signature of this Agreement, the twenty-day period shall begin on the day of signature.

(3) The Central Bank of the Philippines and the Consortium shall conclude an Arrangement in writing concerning the details of the implementation of deferment of transfer under this Agreement. They shall be authorised to establish by mutual agreement any changes in the amounts listed in the Annexes, provided that the totals set forth in Article 1 paragraph (3) are not exceeded.

(4) This Agreement shall not affect the rights and obligations under the contracts on which the claims referred to in Article 1 are based. The Government of the Federal Republic of Germany shall ensure that for the term of validity of this Agreement the German creditors do not assert the claims referred to in Article 1 with the Philippine debtors to any other end than that of obtaining the establishment of the respective deposit. The Central Bank of the Philippines shall, until the respective claims are repaid, maintain an account, denominated in Deutsche Mark, amounting to the equivalent of the sum total of the Philippine Pesos deposited and deemed to have been deposited. Conversion into Deutsche Mark shall be governed by the rates of exchange laid down in Article 2 paragraphs (2) and (4).(5) All payments under this Agreement shall be effected by the Central Bank of the Philippines. The Central Bank of the Philippines shall effect all remittances in such good time that the amounts will be credited, by their due dates pursuant to this Agreement, to the bank account of the Consortium designated in paragraph (1) above to be indicated in the Arrangement in writing referred to in paragraph (3) above. If the Central Bank of the Philippines does not meet or does not meet in full its payment obligations under this Agreement by their due dates, the Government of the Republic of the Philippines shall pay the outstanding amounts without delay and irrespective of any circumstances of and reasons for these delays in payment.

ARTICLE 7

This Agreement shall also apply to Land Berlin, provided that the Government of the Federal Republic of Germany does not make a contrary declaration to the Government of the Republic of the Philippines within three months of the date of entry into force of this Agreement.

ARTICLE 8

This Agreement shall enter into force on the date of signature thereof. Done at Manila on 6 June 1985, in duplicate in the English and German languages, both texts being equally authentic. For the Government of the For the Government of the Republic of the Philippines Federal Republic of Germany

(Sgd.) CESAR VIRATA (Sgd.) Anlage 1 gemãß Artikel 1 Absatz 1 Buchstabe a) des Abkomnens zwischen der Regierung der Bundesrepublik Deutschland und der Regierung der Republik der Philippinen über die Konsolidierung philippinischer Verbindlichkeiten aus Krediten im Zusammen-hang mit deutschen Lieferungen und Leistungen Annex 1 pursuant to paragraph 1 a) of article 1 of the Agreement between the Government of the Republic of the Philippines and the Government of the Federal Republic of Germany on the Consolidation of Philippine Debts arising from Credits connected with German Supplies and ServicesSerien- Gläubiger Schuldner Wahrung Einbezogene Forderung Nr Serial Creditor Debtor Currency Included Claim No. Interest Principal ________________________________________________________ Philippine Dresdner Bank Airlines Inc. 00101 AG Frankfurt/M US$ 3.557.652,39 1.473.691,68 Makati/Rizal Philippine Dresdner Bank Airlines Inc. 00102 AG Frankfurt/M US$ 7.315.581,78 5.080.212,70 Makati/Rizal Manila Paper Sulzer-Escher Mills Inc. Wyss GmbH 00103 Quezon City DM 646.164,90 174.464,50 Ravensburg Manila Tri Union Klöckner Industrial Industrie-Anlagen Corporation 00104 DM 6.053.096,16 658.278,47 GmbH Duisburg Ermita Metro Manila Klöckner Universal Industrie-Anlagen Synthetic Mfg 00105 DM 169.836,62 49.677,21 GmbH Duisburg Corp. Manila Kreditanstalt für Philippine Wiederaufbau Ports Authority 00106 DM 5.957.190,00 2.307.911,70 Frankfurt/M 11 Manila Nat. Kreditanstalt für Electrification Wiederaufbau 00107 Admin. Metro DM 2.812.518,00 1.334.422,76 Frankfurt/M 11 Manila Kreditanstalt für Ministry of Wiederaufbau 00109 Finance Manila DM 656.250,00 387.597,66 Frankfurt/M 11 National Lahmeyer Power International Corporation 00110 GmbH DM 226.950,00 15.602,82 Diliman Frankfurt/Main 71 Quezon CityNational Lahmeyer Power International 00111 Corporation GmbH DM 576.487,30 82.149,51 Diliman Frankfurt/Main 71 Quezon City National Lahmeyer Power International Corporation 00112 GmbH DM 750.000,00 540.131,00 Diliman Frankfurt/Main 71 Quezon City Lepanto Lurgi GmbH Consolidated 00113 Frankfurt/Main 11 Mining Corp. DM 1.181.760,00 355.266,60 Makati/Rizal Santa Ines Lurgi GmbH Mining & Steel 00114 Frankfurt/Main 11 DM 2.018.466,00 1.213.602,67 Corp. Makati Mayer & Cie Citizen Mfg GmbH & Co Corp. Navotas- 00115 Albstadt 2- Balut Metro DM 55.318,50 7.191,41 Tailfingen Manila Republic Krupp-Polysius Cement 00116 AG Beckum Corporation DM 1.814.349,30 689.452,80 Manila Republic Siemens AG Cement 00117 Erlangen Corporation DM 317.038,50 105.415,28 Manila Schubert & Salzer Solid Mills 00118 Ingolstadt Inc. Rizal DM 626.769,00 90.881,50 Standard-Kessel- Lamsan Gessellschaft Trading Inc.

00119 DM 108.890,00 55.533,90

Duisburg Quezon City Trützschler Manila Bay GmbH & Co KG Spinning Mills 00120 Mönchengladbach DM 7.864,20 285,08 Inc. Manila 3 PNCC-Philip. Wilbau Nat. Construct. Aktiengesellschaft Corp. 00121 Gründau 2 DM 1.140.528,33 392.056,65 Mandaluyong Rothenbergen Metro Manila Zinser Manila Bay Textilmaschinen Spinning Mills 00122 GmbH DM 105.479,08 3.823,61 Inc. Manila Ebersbach/FilsZinser Manila Bay Textilmaschinen Spinning Mills 00123 GmbH DM 254.235,80 46.222,50 Inc. Manila Ebersbach/Fils Texfiber Zimmer AG Corporation 00124 Frankfurt/Main DM 568.041,00 42.602,00 Rizal Taytay Fortune Bayerische Cement Vereinsbank AG Corporation 00125 DM 1.229.493,00 362.957,56 München 1 Makati Metro Manila United Coconut Citibank AG Chemicals Inc. 00126 Frankfurt/Main 11 DM 4.140.914,83 2.417.040,82 Makati/Metro Manila Total DM 31.417.641,0211.332.568,01 Total US$ 10.873.234,17 6.553.904,38 Anlage 2 gemãß Artikel 1 Absatz 1 Buchstabo b) des Abkommens zwischen der Regierung der Bundesrepublik Deutschland und der Regierung der Republik der Philippinen über die Konsolidierung philippinischer Verbindlichkeiten aus Krediten im Zusammen-hang mit deutschen Lieferungen und Leistungen Annex 2 pursuant to paragraph 1 b) of article 1 of the Agreement between the Government of the Republic of the Philippines and the Government of the Federal Republic of Germany on the Consolidation of Philippine Debts arising from Credits connected with German Supplies and Services Serien- Gläubiger Schuldner Wahrung Einbezogene Forderung Nr Kapital Zinsen Serial Creditor Debtor Currency Included Claim No.Principal Interest ______________________________________________________________________ Babcock Riverside Mills 00201Textilmaschinen Corporation Manila DM 43.367,75 GmbH Seevetal 3 + San Juan Barmag Remscheid- Imperial Textile 00202 11 Mills Inc. Manila DM 473.200,00 120.192,80 Dresdner Bank AG Philippine Airlines 00203 Frankfurt/M Inc. Makati/Rizal US$ 2.129.610,88 471.370,58 Dresdner Bank AG Philippine Airlines 00204 Frankfurt/M Inc. Makati/Rizal US$ 4.877.054,52 Manila Paper Sulzer-Escher Wyss 00205 Mills, Inc. Quezon GmbH Ravensburg DM 476.776,50 447.184,05 City Manila Tri Union Klöckner Industrie- Industrial 00206Anlagen GmbH Corporation Ermita DM 7.156.037,411.334.585,78 Duisburg Metro Manila Klöckner Industrie- Universal 00207Anlagen GmbH Synthetic Mfg Corp.

DM 84.918,31 68.783,83.

Duisburg Manila Kreditanstalt für Philippine Ports 00208Wiederaufbau Authority Manila DM 1.985.730,00 931.376,65 Frankfurt/M 11 National Kreditanstalt für Electrification 00209Wiederaufbau Admin. Metro DM 849.291,00 458.002,83 Frankfurt/M 11 Manila National Power Lahmeyer Corporation 00212International GmbH Diliman Quezon DM 192.162,60 Frankfurt/Main 71 City Santa Ines Mining Lurgi GmbH 00214 Steel & Steel Corp. Frankfurt/Main 11 DM 672.822,00 Makati Mayer & Cie GmbH Citizen Mfg Corp. 00215& Co Albstadt 2- Navotas-Balut DM 36.879,00 10.787,11 Tailfingen Metro Manila Krupp-Polysius AG Republic Cement 00216 Beckum Corporation Manila DM 1.209.566,20 287.272,00Manila Bay Saurer-Allma GmbH 00217 Spinning Mills Inc. Kempten/Allg. DM 21.772,33 Manila Siemens AG Republic Cement 00218 Erlangen Corporation Manila DM 105.679,50 45.177,98 Schubert & Salzer Solid Mills Inc. 00219 Ingolstadt Rizal DM 835.692,00 227.203,80 Trützschler GmbH Manila Bay 00220& Co KG Spinning Mills Inc.

DM 15.728,40 1.425,38

Mönchengladbach 3 Manila PNCC-Philipp. Wibau Nat. Construct. Aktiengesellschaft 00221 Corp. Gründau 2 DM 1.140.528,33 392.056,65 Manadaluyong Rothenbergen Metro Manila Zinser Manila Bay 00222Textilmaschinen Spinning Mills Inc., DM 210.958,16 GmbH Ebersbach/FilsManila Fortune Cement Bayerische Corporation 00224Vereinsbank AG Makati/Metro DM 819.658,90 164.274,26 Muenchen 1 Manila Kreditanstalt fuer Ministry of 00225Wiederaufbau Finance Manila DM 120.443,31 Frankfurt/M. 11 Total DM 16.330.770,394.608.786,43 Total US$ 7.006.665,40 471.370,58 ABKOMMEN zwischen der Regierung der Republik der Philippinen und der Regierung der Bundesrepublik Deutschland über die Konsolidierung philippinischer Verbindlichkeiten aus Krediten im Zusammenhang mit deutschen Lieferungen undLeistungen