DOJ Opinion No. 083, s. 1985

DOJ OPINION NO. 083 , s. 1985 To the Banks parties to the Credit Agreement referred to below and to Manufacturers Hanover Trust Company, as Agent Central Bank of the Philippines Gentlemen: This opinion is furnished to your pursuant to Section 6.01(a)(v) of the Credit Agreement dated as of May 20, 1985 (the "Credit Agreement") among the Central bank of the Philippines the "Borrower"), the Republic of the Philippines (the "Guarantor"), the financial institutions listed as Banks therein and Manufacturers Hanover Trust Company, as Agent. Terms defined in the Credit Agreement are used herein as therein defined. I am Minister of Justice of the Philippines and have acted in such capacity in connection with the preparation, execution and delivery of, and satisfaction of the conditions precedent to the first Availability Date under, the Credit Agreement. In that connection, I have reviewed the Constitution of the Philippines (the "Constitution"), the Charter of the Borrower (Republic Act No. 265, as amended, of the Philippines), the Foreign Borrowing Act (Republic Act No. 4860, as amended, of the Philippines), Presidential Decree No. 1961 dated January 11, 1985 and such treaties, laws, Presidential Decrees, Executive Orders, and the like as I have deemed necessary for the opinions hereinafter expressed. I have also examined the originals or copies, photocopied, certified or otherwise identified to my satisfaction, of: (1) A counterpart of the Credit Agreement, executed by the Borrower, the Guarantor and the Agent; (2) The documents furnished pursuant to clauses (i), (ii) and (iv) of Section 6.01(a) of the Credit Agreement; (3) The documents furnished pursuant to clauses (viii) and (xii) of Section 6.01(a) of the Credit Agreement (the "Process Agents' letters"); and (4) Such official records, certificates rules and orders of agencies and officers of the Guarantor, such corporate and official records and certificates of the Borrower, and such other agreements and documents as I have deemed appropriate as bases for the opinions expressed herein. In my examination of the documents listed above, I have assumed that, except for all documents executed by the Guarantor, (i) all such documents are authentic and have been duly executed and delivered by or on behalf of each of the parties thereto, (ii) all signatures on all such documents are genuine and copies of all documents submitted to me are complete and conform to the original documents, and (iii) the Credit Agreement has been duly authorized by each of the Banks and the Agent. Insofar as the opinions expressed herein relate to factual matters, information with respect to which is in the possession of the Guarantor but not in my possession, I have made inquiries with respect to such matters and relied upon representation of officers of the Guarantor, and nothing has come to my attention leading me to question, or giving me reasonable grounds to question, the accuracy of such information. As I am qualified to advise the Guarantor regarding the laws of the Philippines and do not represent myself to be familiar with the laws of any jurisdiction other than the Philippines, I do not pass upon and express no opinion in respect of these matters governed by or construed in accordance with any such laws. prcd Based upon the foregoing and subject to the qualifications and observations set forth below, I am of the opinion that: (a) The Borrower is the custodian of the International Monetary Assets of the Philippines, and, by law, the Borrower is vested with all right, title and interest in such International Monetary Assets. The Borrower is wholly owned by the Guarantor. (b) The execution, delivery and performance by the Guarantor of the Credit Agreement are within the Guarantor's power, have been duly authorized by all necessary legislative executive, administrative and other governmental action, and do not contravene (i) the Constitution, (ii) any treaty, law, regulation, decree, or to the best of my knowledge after due inquiry, and judgment, award, injunction or similar legal restriction applicable to the Guarantor, or (iii) to the best of my knowledge after due inquiry, any contractual restriction which binds or affects (or purports to bind or affect) the Guarantor or its assets. The Guarantor has full power and authority to execute and deliver the Credit Agreement and to perform and observe the provisions of the Credit Agreement on its part to be performed or observed and to guarantee, in accordance with the terms of the Credit Agreement, the obligations of the Borrower under the Credit Agreement. (c) No authorization or approval (including exchange control or transfer approval) or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution and delivery of, and performance by the Guarantor of its obligations under, the Credit Agreement, except for the authorizations contained in the certificates of the Presidential Executive Assistant of the Guarantor delivered to the Agent pursuant to Section 6.01(a)(ii), which have been duly obtained, are unconditional and are in full force and effect. (d) The Credit Agreement has been duly executed and delivered by the Guarantor and is the legal, valid and binding obligation of the Guarantor, enforceable against the Guarantor in accordance with its terms, except as enforceability in the Philippines may be limited or affected by moratorium or similar laws affecting creditors' rights generally. (e) The Credit Agreement and the guarantee obligations of the Guarantor thereunder are the direct, unconditional and general obligations of the Guarantor, for the payment of which there is pledged the full faith and credit of the Philippines. (f) The obligations of the Guarantor under the Credit Agreement rank at least pari passu in priority of payment with all other existing unsecured External Indebtedness of all Guarantor. There is no (and there will not be as the result of the execution or performance of the Credit Agreement any) Lien upon or with respect to any of the properties (including, but not limited to International Monetary Assets) or revenues of the Guarantor, which secures, or otherwise provides for payment of, Indebtedness, which Lien would be prohibited by Section 8.02 of the Credit Agreement. (g) There is no pending or, to the best of my knowledge after due inquiry, threatened action or proceeding affecting the Guarantor before any court, governmental agency or arbitrator, which may individually or in the aggregate materially adversely affect the financial condition or operations of the Guarantor or which purports to affect the legality, validity or enforceability of the Credit Agreement. prcd (h) The Guarantor is subject to civil and Commercial law with respect to its obligations under the Credit Agreement and the execution, delivery and performance by the Guarantor of the Credit Agreement constitute and will constitute, private and commercial acts rather than public or governmental acts. The Guarantor is a sovereign entity which has given its consent to be sued in respect of obligations under the Credit Agreement. Except as provided in Section 12.08(d) of the Credit Agreement, the provisions of subsection 12.08(d) are effective to waive, on behalf of the Guarantor and its property, whether or not held for its own account, any immunity (sovereign or otherwise) from any legal action, suit or proceeding, from jurisdiction of any Philippine court or from set-off or any legal process (whether through service or notice, attachment prior to judgment, execution of judgment or otherwise) under the laws of the Philippines in respect of its obligations under the Credit Agreement. The waiver of immunities, the submission to the jurisdiction of the New York State and Federal Courts sitting in The City of New York, the High Court of Justice in London, the competent courts in the jurisdictions in which the Agent's Account for each Loan Currency is located and in Frankfurt/Main, Federal Republic of Germany, the agreements to suit therein and the appointment of the New York Process Agent and the London Process Agent and the other agreements contained in Section 12.08 of the Credit Agreement, are irrevocably binding on the Guarantor. The Process Agents' Letters have each been duly authorized and executed by, and are irrevocably binding on, said Process Agents. (i) The Philippines is a member, and is eligible to use the general resources of the IMF. (j) There are no Philippine Taxes or Other Applicable Taxes imposed by the Philippines either (i) on or by virtue of the execution of the Credit Agreement or any other document to be furnished by the Guarantor thereunder or (ii) on any payment to be made by the Guarantor pursuant to the Credit agreement. (k) To ensure the legality, validity, enforceability or admissibility in evidence of the Credit Agreement in the Philippine, it is not necessary that the Credit Agreement or any other document be filed, registered or recorded with any court or other authority in the Philippines or that any registration charge or stamp or similar tax be paid on or in respect of the Credit Agreement or any other document. (l) The Credit Agreement is in proper legal form under the law of the Philippines for the enforcement thereof against the Guarantor under the law of the Philippines. (m) In any action or proceeding arising out of or relating to the Credit Agreement in any court in the Philippines, such court would recognized and give effect to the provisions of Section 12.11 of the Credit Agreement wherein the parties thereto agree that the Credit Agreement shall be governed by, and construed in accordance with, the laws of the State of New York. Accordingly, such court would apply the laws of the State of New York in any legal action seeking enforcement of the Credit Agreement. Such court would also award a judgment in the currencies in which such obligations are payable. The foregoing opinion is subject to the qualification that in the event of any such action or proceeding in a Philippine court, such court would apply in the law of the Philippines with respect to (i) matters bearing upon the power and authority of the Borrower and the Guarantor to enter into and perform the Credit Agreement and the other agreements contemplated thereunder, and (ii) compliance with all requirements of governmental approvals, authorizations and consents under the Philippine laws, decrees and administrative regulations. (n) It is not necessary under the laws of the Philippines (i) in order to enable the Banks and the Agent or any of them to enforce their respective rights under the Credit Agreement or (ii) by reason of the execution or performance of the Credit Agreement that any of them should be licensed, qualified or entitled to carry on business in the Philippines. The foregoing opinion is subject to the qualification, with respect to any Bank or the Agent otherwise carrying on business in the Philippines (other than by reason only of the execution, performance or enforcement of the Credit Agreement), that such Bank or the Agent will not be permitted to maintain by itself or by an assignee any suit for recovery of any debt, claims or demand whatsoever unless it has or shall have obtained, upon order of the Monetary Board of the Borrower, a license to transact business in the Philippines from the Philippine Securities and Exchange Commission. prcd (o) Neither the Agent and the Banks nor any of them is or will be deemed to be resident, domiciled, carrying on business or subject to taxation in the Philippines by reason only of the execution, performance or enforcement of the Credit Agreement. The performance by the Agent and the Banks or any of them of any action required or permitted under the Credit Agreement will not violate any law or regulation of the Republic of the Philippines. (p) If any judgment of a competent court outside the Philippines were rendered against the Guarantor in connection with any action arising out of or relating to the Credit Agreement, such judgment would be recognized and could be sued upon in the courts of the Philippines, and such courts would grant a judgment which would be enforceable against the Guarantor in the Philippines without any retrial unless it is shown that (i) the foreign court did not have jurisdiction in accordance with its jurisdictional rules, (ii) the party against whom the judgment of such foreign court was obtained had no notice of the proceedings, or (iii) the judgment of such foreign court was obtained through collusion or fraud or was based on clear mistake of law or fact. (q) All conditions precedent on the part of the Guarantor provided for in the Credit Agreement relating to the First Availability Date have been duly complied with and the other documents (including this opinion) being delivered to the Agent and the Banks by or on behalf of the Guarantor pursuant to Section 6.01(a) of the Credit Agreement conform to the requirements of the Credit Agreement. This opinion is further subject to the foregoing qualifications: (i) I express no opinion as to the enforceability in the Philippines of Section 12.07(b) of the Credit Agreement to the extent that it purports to permit a second or separate suit, after recovery on a judgment in a judgment currency, for recovery of the difference between the amount of judgment currency stated in such judgment and the amount of the Agreement currency due under the Credit Agreement. (ii) Nothing in this opinion should be taken as indicating that the remedy of specific performance or injunction under any particular provision of the Credit Agreement would necessarily be granted by a Philippine court in any particular instance, if there is otherwise available an adequate compensatory remedy with respect thereto. (iii) the enforceability of the obligations of the Guarantor under the Credit Agreement is subject to general principles, of equity. In applying this principles, a Philippine court might require that parties exercising any right under the Credit Agreement act reasonably and in good faith. Such a requirement might be applied, among other situations to the provisions of the Credit Agreement purporting to authorize conclusive determinations by the Agent, any Bank or any other party. llcd Very truly yours, (SGD.) ESTELITO P. MENDOZA Minister of Justice