DOJ Opinion No. 090, s. 1986

DOJ OPINION NO. 090 , s. 1986 September 1, 1986 To the Banks and the Servicing Bank parties to the Restructuring Agreement referred to below Gentlemen: This opinion is furnished to you pursuant to Section 6.01(b)(vi) of the Restructuring Agreement dated as of January 10, 1986 (the "Restructuring Agreement") among the Philippine Airlines, Inc., as Obligor, the Republic of the Philippines, as Guarantor, Chemical Bank, as Servicing Bank, and the Banks and Existing Agents parties thereto. Terms defined in the Restructuring Agreement are used herein as therein defined. prcd I am the 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 Tranche A Effective Date under, the Restructuring Agreement. In that connection, I have reviewed the Provisional Constitution of the Republic of the Philippines (the "Constitution"), the Charter of the Obligor (Presidential Decree No. 1590 dated June 11, 1978), the Charter of the Central Bank (Republic Act No. 265, as amended, of the Philippines), the Foreign Borrowings Act (Republic Act No. 4860, as amended, of the Philippines), Presidential Decree No. 1961 dated January 11, 1985, as amended, and such treaties, laws, Presidential Decrees, Executive Orders, Proclamations, 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) The Restructuring Agreement; (2) The Guarantor Authorization identified and attached to the certificate dated August 28, 1986 delivered pursuant to Section 6.01(b)(v) of the Restructuring Agreement; (3) Such official records, certificates, rulings and orders of agencies and officers of the Guarantor, such corporate and official records and certificates of the Obligor, 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 Restructuring Agreement has been duly authorized by each of the Banks and the Servicing Bank. 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 representations 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 those matters governed by or construed in accordance with any such laws. Based upon the foregoing and subject to the qualifications and observations set forth below, I am of the opinion that: (a) The Central Bank is the custodian of the International Monetary Assets of the Philippines, and, by law, the Central Bank is vested with all right, title and interest in such International Monetary Assets. The Central Bank is wholly owned by the Guarantor. prcd (b) The execution, delivery and performance by the Guarantor of the Restructuring Agreement are within the Guarantor's powers, 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, any 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 Restructuring Agreement and to perform and observe the provisions of the Restructuring Agreement on its part to be performed or observed and to guarantee, in accordance with the terms of the Restructuring Agreement, the Obligations of the Obligor under the Restructuring 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 Restructuring Agreement, except for the Guarantor Authorizations, all of which have been duly obtained or made, are unconditional and are in full force and effect. (d) The Restructuring 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 Restructuring 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 Restructuring Agreement rank at least pari passu in priority of payment with all other existing unsecured External Indebtedness of the Guarantor. There is no (and there will not be as the result of the execution or performance of the Restructuring Agreement any) Lien upon or with respect to any of the properties (including, but not limited to, International Monetary Assets) or revenues of Guarantor, which secures, or otherwise provides for payment of, indebtedness, which Lien would be prohibited by Section 8.04 of the Restructuring 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 Restructuring Agreement. (h) The Guarantor is subject to civil and commercial law with respect to its obligations under the Restructuring Agreement and the execution, delivery and performance by the Guarantor of the Restructuring 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 Restructuring Agreement. Except as provided in Section 12.08 (d) of the Restructuring Agreement, the provisions of subsections 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, attachment in aid of execution of judgment, execution of judgment or otherwise) under the laws of the Philippines in respect of its obligations under the Restructuring 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 of the Philippines, any competent courts in the jurisdictions in which the Servicing Bank's Account for each Credit Currency is located and in Frankfurt/Main, Federal Republic of Germany, the agreement 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 Restructuring 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. prcd (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 Restructuring Agreement or any document to be furnished by the Guarantor thereunder or (ii) on any payment to be made by the Guarantor pursuant to the Restructuring Agreement. (k) To ensure the legality, validity, enforceability or admissibility in evidence of the Restructuring Agreement in the Philippines, it is not necessary that the Restructuring 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 Restructuring Agreement or any other document. (l) The Restructuring 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 relating to the Restructuring Agreement in any court in the Philippines such court would recognize and give effect to the provisions of Section 12.11 of the Restructuring Agreement wherein the parties thereto agree that the Restructuring 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 Restructuring 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 the law of the Philippines with respect to (i) matters bearing upon the power and authority of the Obligor and the Guarantor to enter into and perform the Restructuring Agreement and the other agreements contemplated thereunder, and (ii) compliance with all requirements of governmental approvals, authorizations and consents under 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 Servicing Bank or any of them to enforce their respective rights under the Restructuring Agreement or (ii) by reason of the execution or performance of the Restructuring Agreement or the Credit Schedules 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 Servicing Bank otherwise carrying on business in the Philippines (other than by reason only of the execution, performance or enforcement of the Restructuring Agreement or the Credit Schedules), that such Bank or the Servicing Bank 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 Central Bank, a license to transact business in the Philippines from the Philippine Securities and Exchange Commission. (o) Neither the Servicing Bank 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 Restructuring Agreement or the Credit Schedules. The performance by the Servicing Bank, any Existing Agent, the Banks or any of them of any action required or permitted under the Restructuring Agreement or the Credit Schedules will not violate any law or regulation 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 Restructuring 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. prcd (q) All conditions precedent on the part of the Guarantor provided for in the Restructuring Agreement relating to the Tranche A Effective Date have been duly complied with and the other documents (including this opinion) being delivered to the Servicing Bank and the Banks by or on behalf of the Guarantor pursuant to Section 6.01(b) of the Restructuring Agreement conform to the requirements of the Restructuring Agreement (except for variations therefrom which the Servicing Bank has advised me have been consented to by the Majority Banks in accordance with Section 6.01 of the Restructuring Agreement). This opinion is further subject to the following qualifications: (i) I express no opinion as to the enforceability in the Philippines of Section 12.07(b) of the Restructuring Agreement to the extent that it purports to permit a second or separate suit, after recovery on a judgment in a judgment currency of the difference between the amount of judgment currency stated in such judgment and the amount of the Agreement currency due under the Restructuring 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 Restructuring 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 Restructuring Agreement is subject to general principles of equity. In applying these principles, a Philippine court might require that parties exercising any right under the Restructuring Agreement act reasonably and in good faith. Such a requirement might be applied, among other situations, to the provisions of the Restructuring Agreement purporting to authorize conclusive determinations by the Servicing Bank, any Bank or any other party. Very truly yours, (SGD.) NEPTALI A. GONZALES Minister of Justice