DOJ Opinion No. 048, s. 1984

DOJ OPINION NO. 048 , s. 1984 March 21, 1984 The First National Bank of Chicago One First National Plaza Chicago, Illinois 60670 U.S.A. Gentlemen : This opinion is rendered in connection with the Guaranty dated as of March 1, 1984 (the "Guaranty") issued by the Republic of the Philippines (the "Guarantor") in favor of the The First National Bank of Chicago (the "Bank") in which the Guarantor guarantees payment of all amounts payable by Philippine International Trading Corporation (the "Borrower") under and pursuant to that certain Letter Agreement (the "Agreement") dated March 1, 1984 between the Bank and the Borrower, and any and all sums payable by the Philippine National Bank ("PNB") under certain Letters of Credit as defined in the Agreement. All terms used herein shall have the meanings contained in the Agreement, except as otherwise defined herein. LLpr In connection with the rendering of this opinion and in my capacity as Minister of Justice of the Republic of the Philippines. I have examined executed copies of the Agreement and the Guaranty, the approval of the Central Bank in connection with the Agreement and the Guaranty, all certificates of officials and other representatives of the Guarantor, and all such other documents and matters as I have considered necessary or desirable for the opinions hereinafter expressed. In such examination, I have assumed the genuineness of all signatures and the authenticity of all documents submitted to me as originals, and the conformity with the originals of all documents submitted to me as copies thereof, and I have found nothing to indicate that such assumptions are not fully justified. As I am qualified to advise the Guarantor regarding the laws of the Republic of the Philippines and do not represent myself to be familiar with the laws of the United States of America or any state thereof, or the laws of any jurisdiction other than the Republic of the Philippines, I do not pass upon and express no opinion in respect of, those matters governed by or construed in accordance with any of such laws. Based upon and subject to the foregoing, I am of the opinion that: (I) The Guarantor has full legal right, power and authority to execute and delivery the Guaranty and to perform and observe the terms and conditions thereof, and to guarantee the obligations of the Borrower under the Agreement and the Notes and the obligations of PNB under the Letters of Credit. (II) The Guarantor has taken all necessary legal action to authorize the execution and delivery of the Guaranty and the performance and observance of the terms and conditions thereof. Under the laws of the Republic of the Philippines, the President of the Republic of the Philippines has full power and authority to authorize Prime Minister and concurrently Minister of Finance Cesar Virata to execute and deliver the Guaranty on behalf of the Guarantor and to bind the Guarantor thereby. Prime Minister Virata was duly authorized to sign the Guaranty and his signature thereon legally binds the Guarantor, and he has been further authorized to execute and deliver all other documents and certificates required by the terms of the Guaranty. (III) There is no constitutional or treaty provision, law or other governmental directive having the force of law, ordinance, decree, regulation, statute or similar enactment and no contractual or other obligation relating to External Indebtedness binding on the Guarantor, nor any guideline or policy statement (whether or not having the force of law) applicable to the Guarantor, that is or will be contravened, or that will result in the imposition of any lien, charge, encumbrance or other security interest or any segregation or other preferential arrangement (whether or not constituting a security interest) on properties or assets of the Guarantor, by reason of the execution and delivery of the Guaranty or by the performance or observance of any of the terms and conditions thereof. (IV) All consents, authorizations, registration with, and approvals from, any legislative body or government agency, if any, necessary for the due execution and delivery by the Guarantor of the Guaranty have been obtained, and all such registrations and approvals necessary for the performance or enforceability thereof have been obtained and are in full force and effect. All filings and reports delivered to any governmental authority of the Republic of the Philippines by the Guarantor have been truthfully completed and duly filed. LexLib (V) The Guaranty constitutes the legal, valid and binding obligation of the Guarantor enforceable in accordance with its terms. The obligations of the Guarantor thereunder are direct, unconditional and general obligations of the Guarantor for the payment and performance of which the full faith and credit of the Republic of the Philippines is pledged. (VI) The Guarantor is a member in good standing of the International Monetary Fund ("IMF") and is fully eligible to use the general account of, and its special drawing account with, the IMF in accordance with the Articles of Agreement of the IMF. (VII) The obligations of the Guarantor under the Guaranty constitute direct, unconditional and general obligations of the Guarantor, and rank at least pari passu in priority of payment and in all other respects with all other unsecured External Indebtedness of the Guarantor. Except as stated in Section 5(f) of the Guaranty, no External Indebtedness of the Guarantor is secured by or otherwise, benefits from any lien, pledge, mortgage, charge, encumbrance or other security interest, or any segregation or other preferential arrangement (whether or not constituting a security interest), on or with respect to any present or future assets, revenues or rights to the receipt of the Guarantor. (VIII) To the best of my knowledge, there is no pending or threatened legal actions or arbitration or other proceedings which may materially affect the financial condition or operations of the Guarantor or its ability to perform its obligations under the Guaranty or which may materially affect the validity or enforceability of the Guaranty. (IX) The Guarantor is subject to civil and commercial law with respect to its obligations under the Guaranty, and the execution, delivery and performance of the Guaranty by the Guarantor constitute private and commercial acts and not governmental or public acts. Neither the Guarantor nor any of its properties or assets enjoys any right of immunity on the grounds of sovereignty or otherwise from setoff, attachment prior to entry of, or in aid of, execution upon a judgment, suit, judgment or execution upon a judgment in respect of its obligations under the Guaranty. The waiver of any such rights to sovereign immunity contained in Section 7.03 of the Guaranty is irrevocable and binding on the Guarantor and its successors and assigns. (X) There are no withholding, income, or other taxes or charges of the Republic of the Philippines or any political subdivision or taxing authority thereof or of any taxing authority, federation or association of which the Republic of the Philippines is a member, imposed by withholding or otherwise, applicable to any payment to be made by the Guarantor pursuant to the terms of the Guaranty or to be imposed on or by virtue of the execution, delivery, performance or enforcement of the Guaranty, other than withholding tax applicable to payments of interest, which withholding tax the Guarantor is obligated to pay without reduction in amounts payable under the Guaranty. In the event that the Republic of the Philippines or any subdivision or taxing authority thereof should in the future impose any other tax, withholding or charge, whether by change in law, regulation or the interpretation thereof, the Guarantor is and will be obligated to make all payments due under the Guaranty free and clear of any such tax, withholding or charge to that the Bank shall receive the amount due as if no such tax, withholding or charge had been imposed. The Bank shall not be deemed to be resident, domiciled, to have established a place of business or to be carrying on business in the Republic of the Philippines solely by reason of the execution, delivery, performance or enforcement of the Guaranty. (XI) The choice of Illinois law to govern the Guaranty is a valid and irrevocable choice of law; accordingly, the courts of the Republic of the Philippines would apply Illinois laws in proceedings brought in such courts for enforcement of the Guaranty. The submission by the Guarantor to the jurisdiction of any of the courts of the State of Illinois and the Federal courts of the United States of America located in Illinois is a valid submission, to the jurisdiction of such courts. In the event that a judgment of such a court were obtained after proper service of process, the same would be enforced by the courts of the Republic of the Philippines without a further review on the merits, subject only to defenses of want of jurisdiction over the subject matter or nature of the action on the part of the court that rendered the judgment, want of due notice, fraud, collusion or clear mistake of law or fact. The fact that the Guaranty may be executed or delivered in the Republic of the Philippines or any political subdivision thereof does not alter the foregoing opinion. prLL Very truly yours, (SGD.) RICARDO C. PUNO Minister of Justice