DOJ Opinion No. 055, s. 1987

DOJ OPINION NO. 055 , s. 1987 May 29, 1987 Pacific Overseas Finance Corporation Four Embarcadero Center San Francisco, California 94111 Gentlemen : I have acted as legal adviser to the Republic of the Philippines (the "Guarantor") in connection with that certain $40,000,000 Restated Credit and Guaranty Agreement dated as of August 31, 1986 (the "Agreement"),among the Guarantor, Philippine International Trading Corporation (the "Buyer"),Creditanstalt Bankverein ("Creditanstalt") and Pacific Overseas Finance Corporation ("POFC").This opinion is furnished for your benefit and for the benefit of Creditanstalt pursuant to Section 5.1 (a) (5) of the Agreement are used herein as therein defined. In connection therewith, and in my capacity as Secretary of Justice, I have examined the Constitution, laws and regulations of the Republic of the Philippines (the "Republic"). I have also examined (i) an executed copy of the Agreement, (ii) the Notes delivered pursuant to the Agreement, and (iii) such other documents as I have deemed necessary or appropriate as a basis for the opinions expressed herein. On the basis of the foregoing, I am of the opinion that: (1) The Guarantor has full power authority and legal right to execute and deliver the Agreement, including the Guaranty, and to incur and perform its obligations as provided for under the Agreement and no other Government Approval is necessary in connection with the execution, delivery, performance and admissibility into evidence or enforceability of the Agreement, except for the Governmental Approvals specified in Section 5.1 (a) (2) (c) (ii) of the Agreement. (2) The Agreement and the Guaranty have been duly executed and delivered by the Guarantor and constitute the direct unconditional and general obligations of the Guarantor binding on and enforceable against the Guarantor for the performance and payment of which the full faith and credit of the Republic is pledged. (3) There is no Philippine Tax either (i) on or by virtue of the execution, delivery, registration or enforcement of the Agreement, the Guaranty or any other document to be issued or furnished under the Agreement (ii) on any payment to be made by the Guarantor pursuant to the Agreement or the Notes other than withholding taxes on the interest payables under the Notes and to documentary stamp taxes that may be due on the issuance of the Notes. The obligations of the Guarantor under Section 6.2 of the Agreement to make all payments of principal, interest and other sums payable by the Guarantor under the Agreement and the Notes free and clear of, and without reduction by reason of, any Philippine Taxes, and its other obligations under said Section 6.2, are each valid and enforceable under the laws of the Republic. (4) The execution, delivery and performance of the Agreement, including the Guaranty do not and will not contravene any constitutional provision, decree, ordinance, regulation or law or any contractual restrictions relating to External Indebtedness binding on or affecting the Guarantor. (5) It is not necessary for the enforceability or admissibility in evidence of the Agreement and the Notes in the Republic that the agreement or the Notes or any other document be filed or recorded with any Governmental Agency (except for the filing of the Agreement with the Central Bank.) The Approval by the Central Bank of the terms of this Agreement referred to in Section 5.1 (a) (C)(ii) carries with it the authority to purchase the necessary foreign exchange from the local banking system to service the obligations of the Guarantor under the Agreement. No authorization or exchange control approval from any Governmental Agency in the Republic other than those referred to in Section 5.1 (a) (2)(C)(ii) of the Agreement is required for it to make payments of all amounts due under the Agreement and the Notes in the currency and manner and at the times required by the Agreement and Notes. prcd (6) the Guarantor is a member in good standing of the IMF and is eligible to use the General Account of, and its Special Drawing Account with, the IMF under the Articles of Agreement of the IMF. (7) There is no pending or, to the best of my knowledge, threatened action or proceeding (legal or administrative) affecting the Guarantor before any court or arbitrator, which would, if decided adversely to the Guarantor, materially adversely affect the financial condition or operations of the Guarantor. (8) The Guarantor's obligations under the Agreement and the Notes rank at least pari passu in priority of payment and in all other respects with all other External Indebtedness of the Guarantor, except for External Indebtedness secured by Liens permitted by Section 9.3 of the Agreement, and to my best knowledge, no obligation of the Guarantor in respect of its External Indebtedness is secured by any Lien over the whole or any part of its undertaking, property, assets or revenues except for Liens permitted any Section 9.3 of the Agreement. (9) Legal actions or proceedings may be brought against the Guarantor in the courts of the Republic or any other jurisdiction in which proceedings may at any time be taken by POFC or Creditanstalt for the enforcement of the Agreement, the Notes or any other document issued in connection therewith. The waiver by the Guarantor of the right or sovereign immunity to the fullest extent as set forth in Section 12.10 of the Agreement is valid and enforceable upon it, and in accordance with applicable law and precedents. (10) The Agreement is in proper and legal form under the laws of the Republic and would be enforced in accordance with its terms of proceedings for the enforcement thereof were brought in the courts of the Republic. prcd (11) The choice of California law as the law by which the Agreement shall be governed is a valid choice of law irrevocably binding on the Guarantor and will be upheld in any proceeding related to the Agreement in Republic. A Philippine court would, however, also refer to the Philippine laws, decrees and administrative regulations bearing upon the capacity of the Guarantor to enter into contracts generally and the Guaranty in particular. The submission by the Guarantor to the jurisdiction of the courts of the State of California and Federal Courts sitting in San Francisco and New York and Federal Courts sitting in San Francisco and the New York City pursuant to Section 12.4 of the Agreement is valid and binding upon the Guarantor and is not subject to revocation. A final judgment rendered by any such court in proceedings arising out of or in connection with the Agreement would be enforced by the courts of the Republic without a further review, except to the extent only that such judgment may be subject to defenses based on lack of jurisdiction, lack of notice, fraud, collusion, or clear mistake of law or fact. If process is served on the Guarantor in the manner contemplated by Section 12.4 of the Agreement, enforcement of a judgment by the courts of the Republic would not be subject to defenses based on lack of jurisdiction or lack of notice. The expression herein of a specific opinion with regard to a matter covered by a more general opinion also expressed herein is not intended to limit the latter. No opinion is expressed as to any laws other than those of the Republic as a present existing and the regulations made pursuant thereto. Unless and until we give motive to POFC a prior to the extension of any credit under the Agreement of any change in this opinion, each thereof may rely on the conclusions expressed herein at all times from the date hereof to and including the day of such extension of credit. LLphil Very truly yours, (SGD.) SEDFREY A. ORDOEZ Secretary of Justice