VZCZCXYZ0004
OO RUEHWEB

DE RUEHML #2308 1530818
ZNR UUUUU ZZH
O 020818Z JUN 06
FM AMEMBASSY MANILA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 1282
INFO RHHMUNA/CDRUSPACOM HONOLULU HI
RUEKJCS/JOINT STAFF WASHINGTON DC
RUEKJCS/SECDEF WASHDC//OSD/ISA/AP//

UNCLAS MANILA 002308 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR L/T (RM. 5420,ATTN:DAPHNE COOK) 
STATE ALSO FOR PM/RSAT AND EAP/MTS 
USPACOM ALSO FOR FPA HUSO 
SECDEF/OSD/ISA/AP FOR ALLEN 
 
E.O. 12958: N/A 
TAGS: MASS MARR PGOV KTIA RP
SUBJECT: MILITARY GRANT ASSISTANCE: LEGAL REQUIREMENTS 
 
REF: 04 STATE 271500 
 
¶1.  (U) Post received the following diplomatic note from the 
Department of Foreign Affairs (DFA) in response to reftel's 
proposed amendment to the 1974 Exchange of Notes governing 
the 505 Agreement between the United States and Republic of 
the Philippines.  While agreeing to the U.S. proposal, the 
DFA elected not to use reftel's suggested text for its 
response.  The DFA also offered some comments on the change 
in wording. 
 
¶2.  (U) Text of Diplomatic Note. 
 
BEGIN TEXT. 
 
No. 06-1097 
 
The Department of Foreign Affairs presents its compliments to 
the Embassy of the United States of America and has the honor 
to refer to U.S. Note Verbale No. 0282 dated 08 March 2005, 
proposing amendments to the Exchange of Notes dated 16 May 
1974 and 16 July 1974. 
 
The Department has no objection to the proposed amendment and 
submits the following additional comments on the matter: 
 
¶1.  By replacing the phrase "under the Military Assistance 
Program of" with "on a grant basis from" in the second 
paragraph of the Notes dated 16 May and 16 July 1974, this 
may have the effect of expanding the obligation of the 
Philippines under the original Exchange of Notes. 
 
Under the original Exchange of Notes, the Philippines' 
obligation is to share with the U.S. the new proceeds from 
the sale of defense equipment given under the Military 
Assistance Program.  The proposed amendment suggests that the 
said obligation will be expanded to include the net proceeds 
from the sale or disposition of defense equipment furnished 
to the Philippines pursuant to any form of grant.  The 
Philippine Government would appreciate confirmation from the 
U.S. Government regarding this matter. 
 
¶2. Any future exchange of notes, executive agreement, or 
treaty in relation to payment of net proceeds of sales of 
defense articles furnished by the U.S. to the Philippines 
should contain a clearly defined distinction between 
furnishing of defense articles on grant basis on the one hand 
and purchase of defense articles on the other, such that 
payment for the defense articles would not be applicable in 
the latter instance such are being acquired or purchased 
through Philippine funds. 
 
The Department of Foreign Affairs avails itself of this 
opportunity to renew to the Embassy of the United States of 
America the renewed assurances of its highest consideration. 
 
Pasay City, 02 May 2006 
END TEXT. 
 
¶3.  (U) Per reftel, the original of the DFA note and a 
certified copy of the Embassy's note have been pouched to L/T 
RM 5420, Attn: Daphne Cook via registered pouch.  The pouch 
registration number is 4439993. 
 
Visit Embassy Manila's Classified website: 
http://www.state.sgov.gov/p/eap/manila/index. cfm 
Kenney