DOJ Opinion No. 096, s. 1980

DOJ OPINION NO. 096 , s. 1980 July 10, 1980 Bank of Montreal Singapore Branch UTC Building 5 Shenton Way Singapore I Re: Loan and Guaranty Agreement dated as of July 8, 1980 Gentlemen : As the Minister of Justice of the Republic of the Philippines, (the "Guarantor") I have been requested to render an opinion with respect to the applicable laws of the Republic of the Philippines in connection with the Loan, as such term is defined in the Loan and Guaranty Agreement between Philippine Airlines, Inc. (the "Borrower"), the Guarantor and your goodselves as Lender dated as of July 8, 1980 (the "Agreement") providing for a loan to the Borrower in the aggregate amount of up to Seventeen Million United States Dollars (US$17,000,000) evidenced by promissory notes substantially in the form provided for by the Agreement (the "Notes'). LLjur All terms used herein shall have the meaning set forth in the Agreement except as otherwise defined herein. In connection herewith, I have examined the Constitution, relevant Civil Code provisions, Presidential decrees, laws and regulations of the Republic of the Philippines (the "Republic"), the originals or copies, photocopied, certified or otherwise identified to may satisfaction, of all such corporate and official records of the Borrower and to all such official records, regulations, certificates, rulings and orders of officials and agencies of the Government of the Republic, certificates of officials and other representatives of the Borrower, and of all such other agreements, documents, and matters as I have considered necessary or desirable for the opinions hereinafter expressed including, without limitation, the following documents: (a) an executed copy of the Agreement, incorporating the Guarantor's Guaranty and including the Schedules and Exhibits attached thereto; (b) Public Act No. 4271, as amended by Commonwealth Act No. 643, Republic Act No. 2360, Republic Act No. 2667 and Presidential Decree No. 1294 (the "Public Act as Amended"); (c) the Note evidencing the initial Advance, dated July 15, 1980; (d) the Articles of Incorporation and By-Laws of the Borrower, all as in effect on the date hereof; (e) a letter from the District Sales Manager of the Borrower in New York dated July 15, 1980 accepting his appointment as the agent of the Borrower and/or the Guarantor for service of process under the Agreement; (f) the applications to and approvals of the Central Bank of the Philippines, including its letter of June 27, 1980 granting Borrower a 30-day extension for finalizing the Agreement, its "exchange assurance" letter dated July 1, 1980, and its letter of final approval dated July 3, 1980; and the special powers document issued by the President of the Philippines on May 16, 1980 to Minister Cesar Virata in respect of the Agreement; True and correct copies of the aforesaid applications, approvals (including the aforesaid letters) and special powers document are attached to this opinion. (g) The Borrower's notice of Advance; and (h) the Drawdown Certificate of the Borrower. In such examination, I have assumed the genuineness of all signatures and the authenticity of all documents submitted to me as copies thereof, and I have found nothing to indicate that such assumptions are not fully justified. As to any other matters of fact material to the opinions expressed herein, I have relied upon certificates of officers and other representatives of the Borrower. As I am qualified to render this opinion regarding the laws of the Republic 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, 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 and subject to the foregoing, I am of the opinion that: (1) The Guarantor has full legal right, power and authority to give the Guaranty provided for in the Agreement, to execute and deliver the Agreement and to perform and observe the terms and conditions thereof. (2) All appropriate and necessary action has been taken by the Guarantor to authorize the execution and delivery of the Agreement and all the documentation thereunder, Mr. Cesar Virata, the Minister of Finance of the Guarantor, was duly authorized to sign the Agreement and his signature thereon legally binds the Guarantor, and he has been further authorized to execute and deliver all other documents, certificates, notices and other instruments required by the terms of the Agreement. (3) Under the Public Act as Amended and otherwise, all acts, conditions and things required by the law of the Guarantor to be done, fulfilled and performed prior to the execution of the Agreement in order to constitute the obligations assumed by the Guarantor under the Agreement the legal, valid and binding obligations of the Guarantor have been done, fulfilled and performed in due and strict compliance with the laws of the Republic and due authority has been given by the President of the Republic to the person who executed the Agreement on behalf of the Guarantor. (4) The obligations of the Guarantor under the Agreement are direct, unconditional and enforceable and represent general obligations of the Guarantor for which the full faith and credit of the Guarantor is pledged and rank at least pari passu with all other unsecured External Indebtedness of the Guarantor. At least the date hereof there is no External Indebtedness of the Guarantor which is secured by any mortgage, charge, pledge, lien or other encumbrance over any present or future revenue or assets of the Guarantor, aside from (i) liens, pledges, mortgages, charges or other encumbrances upon the Guarantor's property established at the time of purchase of such property and (ii) liens or charges arising in the ordinary course of business and securing a debt maturing not more than one year after its date of creation. (5) The Guarantor is not breach of nor in default under any government, obligation or duty relating to External Indebtedness to which it is a party or by which it, or any of its assets, is bound and the execution and performance of the Agreement will not be or result in a breach of any mortgage, deed, contract or agreement relating to External Indebtedness to which the Guarantor is a party or by which the Guarantor may be bound. (6) The obligations assumed by the Guarantor in and under the Agreement constitute the legal and valid and enforceable obligations of the Guarantor binding upon the Guarantor in accordance with the terms of the Agreement. (7) The Guarantor is a member in good standing of the International Monetary Fund ("IMF) and eligible to use its general account and its special drawing account with the IMF in accordance with the Articles of Agreement of IMF. (8) Except for the approvals of the Central Bank, which approvals have been obtained and are in full force and effect, it is not necessary to ensure the legality, validity, enforceability or admissibility in evidence of the Agreement that it be stamped with any documentary and science stamp, registration or similar transaction tax in the Republic except that in case of suit by the Lenders to enforce their rights under the Agreement in the Republic certain stamp and/or court taxes and duties would be payable. (9) The transactions contemplated by the Agreement are not subject to any currency deposit requirements or any reserve requirements of whatsoever nature under the laws of the Republic. (10) Under Section 25 of the Public Act, the Borrower is exempt from any taxes, fees, imposts, and other charges imposed by the Republic on the Agreement. (11) The execution, delivery and the performance of the Agreement and the Guaranty by the Guarantor constitute private commercial acts rather than governmental or public acts. The Guarantor is not entitled to claim immunity from legal proceedings with respect to it self or any of its property on the grounds of sovereignty or otherwise under any law or in any jurisdiction where an action may be brought for the enforcement of any of the obligations arising under the Agreement, the Notes or any related documentation or for the attachment of property or the execution of any judgment with respect thereto. The Guarantors waiver of any such rights to sovereign immunity with respect to itself and all of its property contained in Section 12.06 of the Agreement is irrevocable and binding on the Guarantor, its successors and assigns. cdlex (12) Under the laws of the Republic, the choice of New York law to govern the validity, construction and performance of the Agreement and the Notes and the transactions therein contemplated is a valid and irrevocable choice of law and the submission by the Guarantor to the jurisdiction of the courts of the State of New York and the Federal courts of the United States of America located in New York is a valid submission to the jurisdiction of such courts. In the event that a judgment of such courts were obtained after service of process in the manner specified in the Agreement or in the even that a judgment obtained after service of process on the Guarantor made by the courts of the Republic at the request of the appropriate court within the State of New York, the same would be enforceable by the courts of the Republic by suit on the judgment, subject only to defense based on want of jurisdiction, want of notice, collusion, fraud, or clear mistake of law or fact. The fact that the Agreement or the Notes may be executed or delivered in the Republic or any political subdivision thereof does not alter the foregoing opinion. Very truly yours, (SGD.) RICARDO C. PUNO Minister of Justice