CONFORMED COPY

LOAN NUMBER 7805-PH

Loan Agreement

(Social Welfare and Development Reform Project)

between

REPUBLIC OF THE PHILIPPINES

and

INTERNATIONAL BANK FOR RECONSTRUCTION

AND DEVELOPMENT

Dated January 7, 2010

 LOAN AGREEMENT

AGREEMENT dated January 7, 2010, between the REPUBLIC OF THE

PHILIPPINES (“Borrower”) and the INTERNATIONAL BANK FOR
RECONSTRUCTION AND DEVELOPMENT (“Bank”). The Borrower and the Bank
hereby agree as follows:

ARTICLE I — GENERAL CONDITIONS; DEFINITIONS

1.01. The General Conditions (as defined in the Appendix to this Agreement)
constitute an integral part of this Agreement.

1.02. Unless the context requires otherwise, the capitalized terms used in this
Agreement have the meanings ascribed to them in the General Conditions or in
the Appendix to this Agreement.

ARTICLE II — LOAN

2.01. The Bank agrees to lend to the Borrower, on the terms and conditions set forth or
referred to in this Agreement, the amount of four hundred and five million
Dollars ($405,000,000) as such amount may be converted from time to time
through a Currency Conversion in accordance with the provisions of Section 2.07
of this Agreement (“Loan”), to assist in financing the project described in
Schedule 1 to this Agreement (“the Project”).

2.02. The Borrower may withdraw the proceeds of the Loan in accordance with Section
IV of Schedule 2 to this Agreement.

2.03. The Front-end Fee payable by the Borrower shall be equal to one quarter of one
percent (0.25%) of the Loan amount.

2.04. The interest payable by the Borrower for each Interest Period shall be at a rate equal
to LIBOR for the Loan Currency plus the Variable Spread provided, that upon a
Conversion of all or any portion of the principal amount of the Loan, the interest
payable by the Borrower during the Conversion Period on such amount shall be
determined in accordance with the relevant provisions of Article IV of the
General Conditions. Notwithstanding the foregoing, if any amount of the
Withdrawn Loan Balance remains unpaid when due and such non-payment
continues for a period of thirty (30) days, then the interest payable by the
Borrower shall instead be calculated as provided in Section 3.02(d) of the
General Conditions.

2.05. The Payment Dates are April 1 and October 1 in each year.
2.06. The principal amount of the Loan shall be repaid in accordance with the
amortization schedule set forth in Schedule 3 to this Agreement.

2.07. (a) The Borrower may at any time request any of the following Conversions
of the terms of the Loan in order to facilitate prudent debt management:
(i) a change of the Loan Currency of all or any portion of the principal
amount of the Loan, withdrawn or unwithdrawn, to an Approved
Currency; (ii) a change of the interest rate basis applicable to all or any
portion of the principal amount of the Loan withdrawn and outstanding
from a Variable Rate to a Fixed Rate, or vice versa; and (iii) the setting
of limits on the Variable Rate applicable to all or any portion of the
principal amount of the Loan withdrawn and outstanding by the
establishment of an Interest Rate Cap or Interest Rate Collar on the
Variable Rate.

(b) Any conversion requested pursuant to paragraph (a) of this Section that
is accepted by the Bank shall be considered a “Conversion”, as defined
in the General Conditions, and shall be effected in accordance with the
provisions of Article IV of the General Conditions and of the Conversion
Guidelines.

(c) Promptly following the Execution Date for an Interest Rate Cap or
Interest Rate Collar for which the Borrower has requested that the
premium be paid out of the proceeds of the Loan, the Bank shall, on
behalf of the Borrower, withdraw from the Loan Account and pay to
itself the amounts required to pay any premium payable in accordance
with Section 4.05(c) of the General Conditions up to the amount
allocated from time to time for the purpose in the table in Section IV of
Schedule 2 to this Agreement.

ARTICLE III — PROJECT

3.01. The Borrower declares its commitment to the objectives of the Project. To this
end, the Borrower shall carry out the Project through DSWD in accordance with
the provisions of Article V of the General Conditions.

3.02. Without limitation upon the provisions of Section 3.01 of this Agreement, and
except as the Borrower and the Bank shall otherwise agree, the Borrower shall
ensure that the Project is carried out in accordance with the provisions of
Schedule 2 to this Agreement.
 ARTICLE IV — REMEDIES OF THE BANK

4.01. The additional event under Section 7.02(m) of the General Conditions consists of
the following:

(a) The Legal Framework has been amended, suspended, abrogated,

repealed, waived or replaced so as to affect materially and adversely the
ability of the Borrower to carry out the Project or to perform any of its
obligations under this Agreement.

ARTICLE V — EFFECTIVENESS; TERMINATION

5.01. The Effectiveness Deadline is the date ninety (90) days after the date of this
Agreement.

ARTICLE VI — REPRESENTATIVE; ADDRESSES

6.01. The Borrower’s Representative is the Secretary of Finance.

6.02. The Borrower’s Address is:

Department of Finance
Department of Finance Building
Bangko Sentral Complex
Roxas Blvd.
Manila, Philippines

Facsimile:

(63-2) 523-9216

6.03. The Bank’s Address is:

International Bank for Reconstruction and Development

1818 H Street, N.W.
Washington, D.C. 20433
United States of America

Cable address: Telex: Facsimile:

INTBAFRAD 248423(MCI) or 1-202-477-6391

Washington, D.C. 64145(MCI)
 AGREED at Manila, Philippines, as of the day and year first above
written.

REPUBLIC OF THE PHILIPPINES

By: /s/ Margarito Teves

Authorized Representative

INTERNATIONAL BANK FOR

RECONSTRUCTION AND DEVELOPMENT

By:/s/ Bert Hofman

Authorized Representative
 SCHEDULE 1

Project Description

The objective of the Project is to strengthen the effectiveness of DSWD as a

social protection agency to efficiently implement the Pantawid Pamilyang Pilipino
Program (the CCT Program) and to expand an efficient and functional National
Household Targeting System of social protection programs.

The Project consists of the following parts:

Part 1: Support to the National Household Targeting System for Poverty

Reduction

(a) Carrying out of household poverty assessments for approximately 8.3 million
households, including collection, supervision, processing, and estimation of
proxy means test data, and issuing of identification cards to households that meet
the poverty criteria as established by the Borrower and set out in the Operations
Manual for part 1 of the Project.

(b) Enhancing the capacity of the National Project Management Office-NHTS

(NPMO-NHTS) to carry out Part 1(a) of the Project through the provision of
technical assistance and training, carrying out of social marketing, development
and implementation of a Management Information System (MIS) for targeting,
and carrying out an assessment of the targeting mechanism through spot checks.

Part 2: Conditional Cash Transfer Program (CCT Program)

(a) Provision by the Borrower of CCT Grants under the CCT Program to
Beneficiaries in order to enable them to access health and/or education services
under the terms and conditions set out in the Operations Manual for Part 2 of the
Project.

(b) Enhancing the capacity of the National Project Management Office–CCT

(NPMO-CCT) to carry out Part 2 (a) of the Project through: (i) provision of
technical assistance and training, acquisition of vehicles for regional offices,
carrying out of a social marketing campaign, and establishment of a grievance
redress system; and (ii) development of a MIS for the CCT Program.

(c) Enhancing the capacity of DSWD to monitor and evaluate Part 2(a) of the Project
through the design and implementation of: (i) a spot check system to ensure that
the CCT Program is functioning as provided for in the Operations Manual for
Part 2 of the Project; (ii) a methodologically rigorous impact evaluation system;
and (iii) a system for regular monitoring.
Part 3: Building Institutional Capacity to Lead in Social Protection

(a) Enhancing the capacity of DSWD in policy and strategy formulation through
development and advocacy of key national social protection policies.

(b) Enhancing the capacity of DSWD in: (i) setting up knowledge management and
learning development networks, (ii) carrying out social marketing activities for
the Project; and (iii) financial management, in each case through the provision of
technical assistance and training.

(c) Enhancing the capacity of DSWD to monitor and evaluate key social protection
programs and policies through the provision of technical assistance and training.
 SCHEDULE 2

Project Execution

Section I. Implementation Arrangements

A. Institutional Arrangements.

1. For the purposes of overall management and oversight and coordination of the
Project, the Borrower shall maintain for the duration of the Project an Executive
Committee within DSWD with oversight responsibility for the Project which shall be
chaired by the Secretary of DSWD and have composition, and terms of reference
satisfactory to the Bank.

2. For the purposes of Part 2 of the Project, the Borrower shall maintain:

(a) A National Advisory Committee (NAC) within DSWD to ensure

coordination of Project activities among key agencies of the Borrower. The NAC shall
be chaired by the Undersecretary responsible for Part 2 of the Project and have
composition and terms of reference satisfactory to the Bank, including the following:
representatives from DSWD and the following agencies or any successor thereof; the
Borrower’s National Anti-Poverty Commission (NAPC); the Borrower’s National
Economic and Development Authority (NEDA); the Borrower’s Department of the
Interior and Local Government (DILG); the Borrower’s Department of Health (DOH);
the Borrower’s Department of Education (DepEd); and the Borrower’s National Nutrition
Council.

(b) A Regional Advisory Committee (RAC) in each region in which Project

activities are taking place, and a Municipal Advisory Committee (MAC) in each
municipality in which Project activities are taking place, to ensure coordination of Project
activities among key agencies of the Borrower at the Regional and local levels,
respectively. The RACs and the MACs shall all maintain composition, staffing, and terms
of reference satisfactory to the Bank. Each RAC and MAC shall serve as a Grievance
Committee to handle public complaints.

3. For the purposes of carrying out the Project, the Borrower shall maintain within
DSWD for the duration of the Project:

(a) a National Project Management Office-NHTS (NPMO-NHTS) headed

by a NPMO-NHTS Director, and having composition, staffing, and terms of reference
satisfactory to the Bank to carry out of Part 1 of the Project; and

(b) a National Project Management Office-CCT (NPMO-CCT) headed by

the NPMO-CCT Director and having composition, staffing, and terms of reference
satisfactory to the Bank carry out Part 2 of the Project.
B. Implementation Arrangements

1. (a) The Borrower shall carry out the Project in accordance with Indigenous
Peoples Participation Framework, the Project Implementation Plan and the Operations
Manuals. The Operations Manual for Part 2 of the Project shall contain, inter alia:

(i) the eligibility criteria and detailed rules, for the identification,
registration and selection of Beneficiaries under Part 2(a) of the
Project;

(ii) the requirements to be fulfilled by Beneficiaries as conditions for

the provision of CCT Grants under Part 2(a) of the Project;

(iii) the mechanisms for verification of compliance with CCT Grant

conditions; and

(iv) the detailed procedures for coordination and collaboration

among the regions, the municipalities, other cooperating
institutions, and other stakeholders in carrying out of the Project.

(b) Except as the Bank shall otherwise agree, the Borrower shall not amend,
waive or fail to enforce the Indigenous Peoples Participation Framework, the Project
Implementation Plan or the Operations Manuals, or any provision thereof. In case of any
conflict between the provisions of this Agreement and those of the Indigenous Peoples
Participation Framework, the Project Implementation Plan or the Operations Manuals, the
provisions of this Agreement shall prevail.

2. For the purpose of carrying out Part 2(a) of the Project, the Borrower, through
DSWD, shall: (a) enter into a Memorandum of Agreement with each Participating LGU
under terms and conditions acceptable to the Bank and consistent with those in this
Agreement and in the Operations Manuals; (b) except as the Bank shall otherwise agree,
not assign, amend, or waive any MOA or any provision thereof which may materially or
adversely affect the satisfactory implementation of the Project; (c) except as the Bank
shall otherwise agree, not abrogate or fail to enforce any MOA or any provision thereof;
and (d) if the event described in Section 7.02(c) of the General Conditions arises in
connection with the implementation of the Project by any representative of a Participating
LGU, address such situation in a manner satisfactory to the Bank. If any event set out in
clauses (b), (c), or (d) of this paragraph occurs, the Bank may, without limitation to any
other rights, declare the relevant Participating LGU to be ineligible for participation in
the Project.

3. The Borrower shall not later than January 31 and July 31 in each year,
commencing July 31, 2010, and until July 31, 2012, and thereafter, not later than July 31
in each year, commencing July 31, 2013, carry out spot checks under terms of reference
and with a minimum coverage satisfactory to the Bank, to verify:
 (a) that Beneficiaries receiving grants under Part 2(a) of the Project meet the
eligibility criteria set out in the Operations Manual for Part 2 of the
Project; and

(b) that Beneficiaries receiving grants under Part 2(a) of the Project are
complying with the requirements of the CCT Program and in particular
those set out in the Operations Manual for Part 2 of the Project.

4. The Borrower shall by April 30, 2010, appoint an independent third party having
qualifications and terms of reference acceptable to the Bank and in accordance with the
provisions of Section III of this Schedule to conduct the spot checks referred to in the
preceding Paragraph.

5. The Borrower through DSWD, shall, no later than six (6) months after the
Effective Date of this Agreement, engage or cause to be engaged the services of reputable
audit consultants, having qualifications and terms of reference acceptable to the Bank, to
assist in strengthening the internal control systems of DSWD, including its internal audit
unit.

6. The Borrower shall no later than five (5) months after the Effective Date: (i) fill
the Operations Audit Division Head position in IAS for the purposes of Part 3(c) of the
Project, and (ii) establish a dedicated financial management group for the Project,
including hiring a financial management officer and other key financial management
staff.

C. Anti-Corruption

The Borrower shall ensure that the Project is carried out in accordance with the
provisions of the Anti-Corruption Guidelines.

D. Eligibility Criteria, Terms and Conditions for Conditional Cash Transfer

Grants

1. Eligibility Criteria

Except as the Bank shall otherwise agree, a CCT Grant shall be made only to the
Beneficiaries who satisfy the eligibility criteria set forth in the Operations Manual for
Part 2 of the Project, which shall include, inter alia, that any of the spot checks carried
out in accordance with Paragraph B.3 of this Section I have not identified such CCT
Grant as being ineligible.
2. Terms and Conditions for Providing CCT Grants for Health Services

CCT Grants to enable Beneficiaries to access health services shall be provided in

accordance with the terms and conditions set out in the Operations Manual for Part 2 of
the Project, which shall include the following:

(a) the Beneficiary shall be a household residing in the Project Area with
one or more children less than fifteen (15) years old or a pregnant
woman;

(b) the amount of the CCT Grant shall be up to Php 500 (approximately $11
equivalent) per month per household irrespective of the number of
children in the household;

(c) all children 0-5 years old in the household must attend a health center or
rural health unit to get the services according to their age, as established
by the Department of Health;

(d) pregnant women must attend a health center or rural health unit
according to DOH protocol;

(e) all selected children 6-14 years old in the household must comply with
the de-worming protocol in school;

(f) for households with children 0-14 years old the household grantee and/or
spouse shall attend family development sessions at least once a month;
and

(g) such CCT Grants, if eligible, shall be financed out of the proceeds of the
Loan upon the establishment and operationalization of a compliance
verification system linked to payments as set out in the Operations
Manual and satisfactory to the Bank.

3. Terms and Conditions for Providing CCT Grants for Education Services

CCT Grants to enable Beneficiaries to access education services shall be provided in

accordance with the terms and conditions set out in the Operations Manual for Part 2 of
the Project, which shall include the following:

(a) The Beneficiary shall be a household living in the Project Area with
children in the age groups of 3-5 and/or 6-14 years old.

(b) The amount of the CCT Grant shall be up to PhP 300 (approximately $6
equivalent) per child per month (for a period of 10 months/year), up to a
maximum of 3 children.
 (c) Beneficiary households will receive payments under the CCT Grant:
(i) for selected children between 6-14 years old so long as they are
enrolled in primary and secondary school and maintain a class attendance
rate of 85% every month; and (ii) for selected children between 3-5 years
old so long as they are enrolled in day care centers and maintain an
attendance rate of 85 % every month, provided, however, that a CCT
Grant under this category shall not be eligible for financing out of the
proceeds of the Loan until such time as agreed to by the Bank.

(d) Such CCT Grants, if eligible, shall be financed out of the proceeds of the
Loan until June 30, 2010 or such later date as the Bank may agree based
on the existing manual monitoring system at the school level and
thereafter such grants shall be financed upon the establishment and
operationalization of a compliance verification system linked to
payments as set out in the Operations Manual and satisfactory to the
Bank.

Section II. Project Monitoring Reporting and Evaluation

A. Project Reports

1. (a) The Borrower shall monitor and evaluate the progress of the Project and
prepare Project Reports in accordance with the provisions of Section 5.08 of the
General Conditions and on the basis of indicators set out in Attachment 1 to this
Schedule 2. Each Project Report shall cover the period of one (1) calendar
semester, and shall be furnished to the Bank not later than one (1) month after the
end of the period covered by such report.

2. The Borrower shall (a) prepare and submit to the Bank for review and comment,
by no later than 24 months after the Effective Date (or such later date as the Bank
and the Borrower may otherwise agree in writing), a draft mid-term review
incorporating the results of each Project Report; and (b) by no later than twelve
(12) weeks thereafter (or such later date as the Bank and the Borrower may
otherwise agree), submit to the Bank a final mid-term review having taken into
account the comments provided by the Bank on mid-term review.

3. For purposes of Section 5.08(c) of the General Conditions, the report on the
execution of the Project and related plan required pursuant to that Section shall
be furnished to the Bank not later than four (4) months after the closing date.

B. Financial Management, Financial Reports and Audits

1. The Borrower shall maintain or cause to be maintained a financial management

system in accordance with the provisions of Section 5.09 of the General
Conditions.
2. Without limitation on the provisions of Part A of this Section, the Borrower shall
prepare and furnish to the Bank as part of the Project Report not later than sixty
(60) days after the end of each calendar quarter, interim unaudited financial
reports for the Project covering the quarter, in form and substance satisfactory to
the Bank.

3. The Borrower shall have its Financial Statements audited in accordance with the
provisions of Section 5.09(b) of the General Conditions. Each audit of the
Financial Statements shall cover the period of one (1) fiscal year of the
Borrower. The audited Financial Statements for each such period shall be
furnished to the Bank not later than six (6) months after the end of such period.

4. The Borrower shall, no later than sixty (60) days after the end of each calendar
semester, commencing with the second semester after the date of this
Agreement, submit to the Bank an internal audit report covering the Project.

Section III. Procurement

A. General

1. Goods. All goods required for the Project and to be financed out of the proceeds
of the Loan shall be procured in accordance with the requirements set forth or
referred to in Section I of the Procurement Guidelines, and with the provisions of
this Section.

2. Consultants’ Services. All consultants’ services required for the Project and to
be financed out of the proceeds of the Loan shall be procured in accordance with
the requirements set forth or referred to in Sections I and IV of the Consultant
Guidelines and with the provisions of this Section.

3. Definitions. The capitalized terms used below in this Section to describe

particular procurement methods or methods of review by the Bank of particular
contracts refer to the corresponding method described in the Procurement
Guidelines, or Consultant Guidelines, as the case may be.

B. Particular Methods of Procurement of Goods

1. International Competitive Bidding. Except as otherwise provided in paragraph

2 below, goods shall be procured under contracts awarded on the basis of
International Competitive Bidding procedures.

2. Other Methods of Procurement of Goods. The following table specifies the

methods of procurement, other than International Competitive Bidding, which
may be used for goods. The Procurement Plan shall specify the circumstances
under which such methods may be used.
 Procurement Method

(a) National Competitive Bidding, subject to the provisions set forth in

Attachment 2 to this Schedule
(b) Shopping
(c) Direct Contracting

C. Particular Methods of Procurement of Consultants’ Services

1. Quality- and Cost-based Selection. Except as otherwise provided in paragraph

2 below, consultants’ services shall be procured under contracts awarded on the
basis of Quality- and Cost-based Selection.

2. Other Methods of Procurement of Consultants’ Services. The following table

specifies the methods of procurement, other than Quality- and Cost-based
Selection, which may be used for consultants’ services. The Procurement Plan
shall specify the circumstances under which such methods may be used.

Procurement Method

(a) Least-Cost Selection

(b) consultants’ qualifications
(c) single source selection
(d) Individual Consultants

D. Review by the Bank of Procurement Decisions

The Procurement Plan shall set forth those contracts which shall be subject to the Bank’s
Prior Review. All other contracts shall be subject to Post Review by the Bank.

Section IV. Withdrawal of Loan Proceeds

A. General

1. The Borrower may withdraw the proceeds of the Loan in accordance with the
provisions of Article II of the General Conditions, this Section, and such
additional instructions as the Bank shall specify by notice to the Borrower
(including the “World Bank Disbursement Guidelines for Projects” dated May
2006, as revised from time to time by the Bank and as made applicable to this
Agreement pursuant to such instructions), to finance Eligible Expenditures as set
forth in the table in paragraph 2 below.
2. The following table specifies the categories of Eligible Expenditures that may be
financed out of the proceeds of the Loan (“Category”), the allocation of the
amounts of the Loan to each Category, and the percentage of expenditures to be
financed for Eligible Expenditures in each Category.

Category Amount of the Loan Percentage of

Allocated Expenditures to be
(expressed in USD) financed

(1) Goods, training, 81,601,000 100%

workshops, consultants’
services and incremental
operating costs for the
Project

(2) Conditional Cash 320,886,000 75% of amounts disbursed

Transfer Grants under each Grant

(3) Front-end Fee 1,012,500 Amount payable pursuant

to Section 2.03 of this
Agreement in accordance
with Section 2.07(b) of the
General Conditions

(4) Unallocated 1,500,500

TOTAL AMOUNT 405,000,000

B. Withdrawal Conditions; Withdrawal Period

1. Notwithstanding the provisions of Part A of this Section, no withdrawal shall be

madefor payments made prior to the date of this Agreement, except that
withdrawals up to an aggregate amount not to exceed $81 million equivalent may
be made for payments made prior to this date but on or after December 1, 2008
for Eligible Expenditures under Categories 1 and 2.

2. No payments made under a CCT Grant to a Beneficiary shall be eligible for

financing out of the proceeds of the Loan unless: (a) the Borrower has entered
into a Memorandum of Agreement with the relevant Participating LGUs as
referred to in Paragraph B.2 of Section I of this Schedule, such Agreement has
not been suspended or terminated and such LGU has not been declared to be
ineligible; (b) the Beneficiary has been selected in accordance with the eligibility
criteria as referred to in Paragraph D.1 of Section I of this Schedule; (c) the
 Borrower has obtained a Letter of Commitment from the Beneficiary and such
Letter has not been suspended or terminated; (d) the Borrower and the
Beneficiaries have complied with the conditions for the provision of CCT Grants
as set out in the Operations Manual including those referred to in Paragraphs D.2
and D.3 of Section I of this Schedule; (e) the payments have been made in
accordance with a mechanism satisfactory to the Bank; and (f) the Borrower has
carried out a verification of compliance with the above conditions in accordance
with the mechanism and procedures set out in the Operations Manual in a manner
satisfactory to the Bank and as referred to in paragraphs D.2(g) and D.3(d) of
Section I of this Schedule.

3. The Closing Date is June 30, 2014.

 ATTACHMENT 1 TO SCHEDULE 2

Key Performance Indicators

PDO Project Outcome Indicators (POIs) Use of Project Outcome

Information

To strengthen the effectiveness  Share of all poor households  Yr1-Yr2 - Assess progress in
of DSWD as a social protection registered in the National building national database of
agency to efficiently implement Household Targeting System for poor households.
the Pantawid Pamilyang Poverty Reduction (NHTS-PR).1
Pilipino Program (the CCT  Share of children 6-14 years old in  Yr1-Yr5 – Measure the
Program) and to expand an poor beneficiary households achievement of the POIs and
efficient and functional National attending school at least 85% of assess effectiveness of
Household Targeting System of the time. targeting system for CCT
social protection programs. program.
 Share of children 0-5 years old
undergoing growth monitoring and
check-ups in accordance with
DOH protocol

Part 1 of the Project  At least 2 major national programs  Assess whether the NHTS-PR
using the NHTS-PR for selecting is being used by national
their beneficiaries. agencies to target poor
households.
A targeting system to select
poor households implemented
and functioning efficiently.

1
Based on baseline of poor households in the latest official household data of 2006 (4.7 million
poor households total).
 Intermediate Outcomes Intermediate Outcome Indicators Use of Intermediate Outcome
Monitoring
 MIS designed and in operation  Assess whether the IT
including integrated data entry infrastructure software and
application, proxy means test data hardware is being developed
processing and management, and to support the NHTS-PR.
sharing capabilities properly
functioning.

 Share of poor households  Assess whether DSWD is

registered in the database receiving making progress in the use of
benefits of social programs. NHTS-PR.

Part 2 of the Project  MIS developed and functioning to  Assess the MIS performance
support payments, verification,
updates and grievance system.

CCT program implemented and  Share of beneficiary households  Assess pace of project
functioning efficiently. receiving CCT Grants regularly implementation.
and on time.

 Share of households meeting  Assess that verification

conditionalities set out in the system in education and
Operations Manual for Part 2 of health is in place and
the Project for CCT Grants for functional.
education.

 Share of households meeting

conditionalities set out in the
Operations Manual for Part 2 of
the Project for CCT Grants for
health.

Spot checks for CCT Program of  Yr2-Yr5: Assess progress in

schools, clinics, municipal links, and program implementation
beneficiary households carried out
annually.

Impact evaluation report based on  Results of the impact

first follow-up survey. evaluation will allow for
corrective measures to be
undertaken and/or increases
 buy in among stakeholders.
Part 3 of the Project  Social protection operational  Policies will provide the
framework developed and adopted. analytical basis for sustained
Key institutional systems on implementation of the
policy formulation, monitoring targeting system and CCT
and impact evaluation and  Framework for integrated service program beyond 2013.
social marketing developed and delivery developed and adopted.
operationalized  Capacity building will ensure
efficient implementation of
 Evaluation of two social protection the Project and eventual
programs completed and mainstreaming of the Project
disseminated. into the Borrower’s overall
social welfare reform
program.
 ATTACHMENT 2 TO SCHEDULE 2

National Competitive Bidding Procedures

The procedures to be followed for National Competitive Bidding shall be those set out in
the Borrower’s Government Procurement Reform Act (Republic Act No. 9184)
(hereinafter referred to as the Procurement Law) with the following clarifications or
modifications required for compliance with the Procurement Guidelines:

1. Eligibility screening shall not be applied. However, bids that do not contain any
of the following documents will not pass the documentary compliance check:
(a) evidence of the required financial, technical or production capability; (b) audited
financial statements; (c) credit line or cash deposit certificate; (d) bid security; and
(e) authority of the bid signatory.

2. A ceiling may be applied to bid prices provided the following conditions are met:
(a) Bidding documents are obtainable free of charge on a freely accessible website;
(b) The agency has procedures in place to ensure that the ABC 2 is based on Engineer’s
Estimate; (c) The agency has trained cost estimators on estimating prices and analyzing
bid variance; (d) the agency has established a system to monitor and report bid prices
relative to ABC and Engineer’s estimate.

3. Domestic or regional preferences will not be applied in the evaluation of bids,

and other preference in effect in the Philippines will not be used except with prior
concurrence of the Bank.

4. In case of contracts for prior review, modification exceeding 15% of contract

amount and material changes in the conditions during implementation, require prior Bank
concurrence.

5. Foreign suppliers and contractors shall be allowed to participate, if interested,

without first being required to associate with, or enter into joint venture, with local firms.
Moreover, foreign bidders shall be allowed to bid, even without registration, licensing,
and other government authorizations, leaving these requirements for after award and
before signing of contract.

6. For works contract, the experience qualification requirement shall be: (a) at least
one previous contract at 80% of the estimated cost of the contract being procured; and
(b) an annual turnover from all works averaged over the last three years equal to 100% of
the estimated cost of the contract being procured.

2
As defined in the Procurement Law
7. Alternative procurement methods defined in the implementing rules and
regulations such as Limited Source Bidding, Direct Contracting and Shopping are
acceptable. The use of the other alternative methods will require prior Bank concurrence.

8. A period of at least 30 days for bid preparation shall be allowed.

 SCHEDULE 3

Amortization Schedule

1. The following table sets forth the Principal Payment Dates of the Loan and the
percentage of the total principal amount of the Loan payable on each Principal
Payment Date (“Installment Share”). If the proceeds of the Loan have been fully
withdrawn as of the first Principal Payment Date, the principal amount of the
Loan repayable by the Borrower on each Principal Payment Date shall be
determined by the Bank by multiplying: (a) Withdrawn Loan Balance as of the
first Principal Payment Date; by (b) the Installment Share for each Principal
Payment Date, such repayable amount to be adjusted, as necessary, to deduct any
amounts referred to in paragraph 4 of this Schedule, to which a Currency
Conversion applies.

Principal Payment Date Installment Share

(Expressed as a Percentage)
On each April 1 and October 1
beginning April 1, 2020 through April 1, 3.33%
2034
On October 1, 2034 3.43%

2. If the proceeds of the Loan have not been fully withdrawn as of the first Principal
Payment Date, the principal amount of the Loan repayable by the Borrower on
each Principal Payment Date shall be determined as follows:

(a) To the extent that any proceeds of the Loan have been withdrawn as of
the first Principal Payment Date, the Borrower shall repay the
Withdrawn Loan Balance as of such date in accordance with paragraph 1
of this Schedule.

(b) Any amount withdrawn after the first Principal Payment Date shall be
repaid on each Principal Payment Date falling after the date of such
withdrawal in amounts determined by the Bank by multiplying the
amount of each such withdrawal by a fraction, the numerator of which is
the original Installment Share specified in the table in paragraph 1 of this
Schedule for said Principal Payment Date (“Original Installment Share”)
and the denominator of which is the sum of all remaining Original
Installment Shares for Principal Payment Dates falling on or after such
date, such amounts repayable to be adjusted, as necessary, to deduct any
amounts referred to in paragraph 4 of this Schedule, to which a Currency
Conversion applies.
3. (a) Amounts of the Loan withdrawn within two (2) calendar months prior to
any Principal Payment Date shall, for the purposes solely of calculating
the principal amounts payable on any Principal Payment Date, be treated
as withdrawn and outstanding on the second Principal Payment Date
following the date of withdrawal and shall be repayable on each
Principal Payment Date commencing with the second Principal Payment
Date following the date of withdrawal.

(b) Notwithstanding the provisions of sub-paragraph (a) of this paragraph, if at

any time the Bank adopts a due date billing system under which invoices
are issued on or after the respective Principal Payment Date, the
provisions of such sub-paragraph shall no longer apply to any
withdrawals made after the adoption of such billing system.

4. Notwithstanding the provisions of paragraphs 1 and 2 of this Schedule, upon a

Currency Conversion of all or any portion of the Withdrawn Loan Balance to an
Approved Currency, the amount so converted in the Approved Currency that is
repayable on any Principal Payment Date occurring during the Conversion
Period, shall be determined by the Bank by multiplying such amount in its
currency of denomination immediately prior to the Conversion by either: (i) the
exchange rate that reflects the amounts of principal in the Approved Currency
payable by the Bank under the Currency Hedge Transaction relating to the
Conversion; or (ii) if the Bank so determines in accordance with the Conversion
Guidelines, the exchange rate component of the Screen Rate.
 APPENDIX

Section I. Definitions

1. “Anti-Corruption Guidelines” means the “Guidelines on Preventing and

Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA
Credits and Grants”, dated October 15, 2006.

2. “Beneficiary” means a household eligible to receive a grant under Part 2(a) of the
Project.

3. “Category” means a category set forth in the table in Section IV of Schedule 2 to

this Agreement.

4. “Conditional Cash Transfer Grant” and “CCT Grant” mean any of the grants to
be provided under Part 2(a) of the Project.

5. “Conditional Cash Transfer Program” and “CCT Program” mean the Borrower’s
program for the assistance of poor families through the provision of cash
transfers conditional on compliance with the conditions referred to in the Legal
Framework and the Operations Manual for Part 2 of the Project and otherwise
known as the Pantawid Pamilyang Pilipino Program.

6. “Consultant Guidelines” means the “Guidelines: Selection and Employment of

Consultants by World Bank Borrowers” published by the Bank in May 2004 and
revised in October 2006.

7. “DOH” means the Borrower’s Department of Health or any successor thereto.

8. “DSWD” means the Borrower’s Department of Social Welfare and Development

or any successor thereto.

9. “General Conditions” means the “International Bank for Reconstruction and

Development General Conditions for Loans”, dated July 1, 2005 (as amended
through February 12, 2008) with the modifications set forth in Section II of this
Appendix.

10. “IAS” means the Internal Audit Services unit in DSWD, or any successor thereto.

11. “Incremental operating costs” means the operating costs incurred by DSWD on
account of the implementation of Project, including maintenance of vehicles,
fuel, equipment, office supplies, utilities, consumables, advertising expenses,
printing of materials, travel per diems, and accommodation, but excluding
salaries of the Borrower’s civil servants.
12. “Indigenous Peoples Participation Framework” means the framework set out in
the Indigenous Peoples Participation Framework document dated January 27,
2009 provided by the Borrower to the Bank.

13. “Legal Framework” means the framework of the Borrower establishing the CCT
Program and comprising among others the following: (a) Memorandum Circular
No. 09, Series of 2007, for Creating the Ahon Pamilyang Pilipino Program
(AAP) National Advisory Committees and Defining their Roles and
Responsibilities; (b) Administrative Order No. 16, Series of 2008, for Guidelines
on the Implementation of Pantawid Pamilyang Pilipino Program (4Ps); (c) Joint
Memorandum Circular No. 01, Series of 2009, for Defining the Institutional
Arrangements for the Implementation, Monitoring and Evaluation of the
Pantawid Pamilyang Pilipino Program (4Ps), as may be revised from time to
time.

14. “Letter of Commitment” means the letter obtained or to be obtained by the

Borrower through DSWD from a Beneficiary setting out, inter alia, the
commitments to be fulfilled by said Beneficiary as conditions for receiving a
CCT Grant.

15. “LGUs” means Local Government Units which are political subdivisions of the
Borrower at the provincial, city, municipal or barangay level, and “LGU” means
any such Local Government Unit.

16. “Memorandum of Agreement” and “MOA” means the Agreement entered into or
to be entered into by the Borrower through DSWD and the Participating LGU in
accordance with the Operations Manual for the purpose of implementing the
Program as referred to in Paragraph B.2 of Section I of Schedule 2 to this
Agreement.

17. “MIS” means Management Information System.

18. “National Project Management Office-CCT” and “NPMO-CCT” mean the office
to be maintained by the Borrower in DSWD to carry out Part 2 of the Project, as
provided for in Paragraph A.3(b) of Section 1 of Schedule 2 to this Agreement.

19. “National Project Management Office-NHTS” and “NPMO-NHTS” mean the

office to be maintained by the Borrower in DSWD to carry out Part 1 of the
Project, as provided for in Paragraph A.3(a) of Section 1 of Schedule 2 to this
Agreement.

20. “Operations Manual for Part 1 of the Project” means the manual dated August.
28, 2009 duly adopted by the Borrower and found acceptable by the Bank as
such manual may be revised from time to time in agreement with the Bank.
21. “Operations Manual for Part 2 of the Project” means the manual dated September
24, 2009 duly adopted by the Borrower and found acceptable by the Bank as
such manual may be revised from time to time in agreement with the Bank.

22. “Operations Manuals” means, collectively, the Operations Manual for Part 1 of
the Project and the Operations Manual for Part 2 of the Project, and referred to in
Section I.B.1 of Schedule 2 to this Agreement.

23. “Participating LGUs” means the LGUs at the city or municipal level selected in
accordance with the policies and procedures set forth in the Operations Manual to
participate in the CCT Program.

24. “Procurement Guidelines” means the “Guidelines: Procurement under IBRD

Loans and IDA Credits” published by the Bank in May 2004 and revised in
October 2006.

25. “Procurement Law” means the Borrower’s Government Procurement Reform Act
(Republic Act No. 9184).

26. “Procurement Plan” means the Borrower’s procurement plan for the Project,
dated July 10, 2009 and referred to in paragraph 1.16 of the Procurement
Guidelines and paragraph 1.24 of the Consultant Guidelines, as the same shall be
updated from time to time in accordance with the provisions of said paragraphs.

27. “Project Area” means the 160 municipalities of the Borrower listed in the Project
Implementation Plan selected by the Borrower in which the Project will be
carried out as such list may be revised from time to time with the prior approval
of the Bank.

28. “Project Implementation Plan” and “PIP” mean the plan for the implementation
of the Project dated July 10, 2009 adopted by the Borrower and found acceptable
by the Bank, as such plan may be revised from time to time with the prior
approval of the Bank.

Section II. Modifications to the General Conditions

The modifications to the General Conditions are as follows:

1. Paragraph (a) of Section 2.07 is modified to read as follows:

“Section 2.07. Refinancing Preparation Advance; Capitalizing Front-end Fee

and Interest

(a) If the Loan Agreement provides for the repayment out of the
proceeds of the Loan of an advance made by the Bank or the Association
 (“Preparation Advance”), the Bank shall, on behalf of such Loan Party, withdraw
from the Loan Account on or after the Effective Date the amount required to
repay the withdrawn and outstanding balance of the advance as at the date of
such withdrawal from the Loan Account and to pay all accrued and unpaid
charges, if any, on the advance as at such date. The Bank shall pay the amount
so withdrawn to itself or the Association, as the case may be, and shall cancel the
remaining unwithdrawn amount of the advance.”

2. Paragraph (l) of Section 7.02 is modified to read as follows:

“Section 7.02. Suspension by the Bank

... (l) Ineligibility. The Bank or the Association has declared the Borrower
(other than the Member Country) or the Project Implementing Entity ineligible to
receive proceeds of any financing made by the Bank or the Association or
otherwise to participate in the preparation or implementation of any project
financed in whole or in part by the Bank or the Association, as a result of a
determination by the Bank or the Association that the Borrower or the Project
Implementing Entity has engaged in fraudulent, corrupt, coercive or collusive
practices in connection with the use of the proceeds of any financing made by the
Bank or the Association.”

3. The following terms and definitions set forth in the Appendix are modified or
deleted as follows, and the following new terms and definitions are added in
alphabetical order to the Appendix as follows, with the terms being renumbered
accordingly:

(a) The term “Project Preparation Advance” is modified to read “Preparation

Advance” and its definition is modified to read as follows:

“‘Preparation Advance’ means the advance referred to in the Financing

Agreement and repayable in accordance with Section 2.07.”

(b) The definition of the term “Conversion Date” is modified to read as

follows:

“‘Conversion Date’ means, in respect of a Conversion, the Execution

Date (as herein defined) or such other date as requested by the Borrower
and accepted by the Bank, on which the Conversion enters into effect,
and as further specified in the Conversion Guidelines.”

(c) The definition of the term “Variable Rate” is modified, in relevant part,
to read as follows:
“(c) upon a Currency Conversion to an Approved Currency of an
amount of the Withdrawn Loan Balance that accrues interest at a variable
rate during the Conversion Period, the variable rate of interest applicable
to such amount shall be equal to either: (i) the sum of: (A) LIBOR, or
such other base rate as may be agreed by the Borrower and the Bank, for
the Approved Currency; plus (B) the spread to LIBOR or to such other
base rate, if any, payable by the Bank under the Currency Hedge
Transaction relating to said Currency Conversion; or (ii) if the Bank so
determines in accordance with the Conversion Guidelines, the interest
rate component of the Screen Rate.”