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January 11, 1988

The Institute de Credito Oficial,( hereinafter "ICO") designated as the Financial Agent for the Spanish Government.based on its guidelines and the Republic of the Philippines hereby conclude the following:

ARTICLE ONE

1. The object of present Agreement is to determine the terms for the repayment of the amounts of principal and interest due from January 1, 1987. to June 30, 1988 inclusive and not paid derived from the Technical Banking Agreement signed by ICO and the NATIONAL DEVELOPMENT COMPANY, both parties as financial agents on behalf of their respective Governments on December 4, 1981 and July 12, 1982.

2. The present Agreement does not modify the repayment schedule for the remaining debt of the Republic of the Philippines with "ICO", the terms and conditions of the two mentioned Techincal Banking Agreements will remain in force.

ARTICLE TWO

The total sums to be refinanced amount to US dollars 576,243.53 (FIVE HUNDRED SEVENTY SIX THOUSAND TWO HUNDRED FOURTY THREE AND FIFTY THREE) .which represents the 70% of the debt for interests that will be due during the period from January 1, 1987 to June 30, 19 8 8 inclusive which amounts to US dollars 823,205.02 derived from the Technical Banking Agreements signed with the NATIONAL DEVELOPMENT COMPANY dated December 4, 1981 and July 12, 1982, according to the detail of Annex I attached hereto.

ARTICLE THREE

The amounts to be refinanced as aforementioned in Article Two above will bear interest at a rate per annum fo the LIBOR quoted by Banco de España and Citibank, London for the relevant period, two business days before the commencement of the said relevant period.

The interest will be calculated on the basis of a year of 360 days from the original maturity date, according to the scheme set forth in Annex II.

2. The interests shall be paid by half yearly instalments on April the first and October the first of each year until the debt has been paid in full. The first payment shall be made on April 1st, 1988.ARTICLE FOUR

ARTICLE FOUR

The Republic of the Philippines according to the Agreed Minute"of the Club of Paris, Article II.2.A) and B) shall pay the amounts refinanced in instalments as described here below:

The above mentioned amounts shall be paid by the Republic of the Philippines through the Central Bank of the Philippines at value dates of maturity in US dollars to the Account number 904 "De Organismos" of the Banco de Espana, Madrid, in favour of INSTITUTO DE CREDITO OFICIAL.- FONDO DE AYUDA AL DESARROLLO.

ARTICLE FIVE

In the event of failure by the Republic of the Philippines to pay when due any of the above mentioned amounts, such amounts will bear accrued interest at a rate per annum of 1/2 per cent over the interest-rate provided by Article Three for the accounting period falling between the "30 days" after the corresponding value date and the effective payment date. The riod for late payment shall not exceed in any case, twelve months after which the provisions of Article Six shall be applied.

ARTICLE SIX

In the event of failure by the Republic of the Philippines to fulfill its obligations derived from the present Agreement, "ICO" shall be entitled after twelve months from the maturity date to denounce the present Agreement by default requesting the outstanding amounts together with acrrued interest upon the date in which the cash payment shall be made. "ICO" shall communicate such decision by written notice, cable or telex at least 60 days prior to the date in which the cash payment shall be made.

ARTICLE SEVEN

1. The Central Bank of the Philippines and "ICO" agree on communicating with one another or holding meetings, should it be necessary, in order to solve any difficulty which might arise when performing the present Agreement.

In the case of any discrepancy between the parties on the interpretation of the present Agreement the Spanish version shall prevail.

ARTICLE EIGHT

The Republic of the Philippines undertakes not to accord more favourable treatment for the same type of debts as defined in the agreed minute of January 22, 1987 to any other participating creditor country than that which it accords to I.CO according to the present Agreement.

ARTICLE NINE

1. The Central Bank of the Philippines is appointed as Agent by the Republic of the Philippines for the performance of the present Agreement according to the internal law.

2. The communications between both parties shall be send to the following addresses:

ARTICLE TEN

All payments to be made by the Republic of Philippines under this Agreement shall be made without deduc any tax, duty or any similar charges imposed in the Philippine

ARTICLE ELEVEN

The Agreement shall remain in force until all obligations which may arise for both parties have been comple fulfilled.

Executed in two originals in Spanish and two in Engl Signed in Manila, January 11, 1988

ANNEX I

I. Debts concerned

The debt service, to which the present reorganisation is reffered to, shall result from:

1. Technical Banking Agreement, dated December 4 , 1981

2. Technical Banking Agreement, dated July 12,1982

3 (1+2). Total debt falling due under the reorganization period US $ 823.205,02

II. Terms of the consolidation

The debt relief shall be applied as follows:

- 70% of interest, due from January 1, 1987 up to June 30, 1988 regarding the credits mentioned in paragraph I above, shall be refinanced and the repayment be made according to ARTICLE FOUR of the present Agreement. The remaining 30% of interest shall be paid according to the original schedule as follows:

Consequently, 30% of the refinanced interests shall be paid in 3 instalments, $ US 82.170,00 on June 15,1987, $ US 82.621,49 on December 15,19-87 and $ US 82.170f00 on June 15,1988.

ANNEX II

Scheme to the calculation of refinanced interests