DOJ Opinion No. 101, s. 1983

DOJ OPINION NO. 101 , s. 1983 July 6, 1983 The Asian Development Bank Roxas Boulevard Manila Gentlemen : This has reference to the Loan Agreement (Loan No. 607 PHI /Power System Development Project/ dated January 10, 1983, entered into between the Asian Development Bank (ADB) and the National Power Corporation (Borrower), whereby the former agreed to lend the latter an amount in various currencies equivalent to P32,75 million (Sec. 2.01, Art. 11, Loan Agreement), and the Guarantee Agreement of the same date between the Republic of the Philippines (Guarantor) and the ADB by virtue of which the former has guaranteed the said loan. Under the abovesaid Guarantee Agreement, the Republic of the Philippines, as Guarantor, has unconditionally guaranteed, "as primary obligor and not as surety merely, the due and punctual payment of the principal of, and interest and other charges on, the loan, the premium, if any, on the prepayment of the loan, and the punctual performance of all the covenants and agreements of the Borrower, all set forth in the Loan Agreement ". (Sec. 2.01, Art. 11, Guarantee Agreement). In accordance with Section 9.02, Article IX of the ADB Ordinary Operations Loan Regulations, dated February 17, 1977, which is made applicable to the Guarantee Agreement (Sec. 1,01, Art. I, Guarantee Agreement), opinion is requested showing, on behalf of the Guarantor, "that the Guarantee Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, the Guarantor and is legally binding upon the Guarantor in accordance with its terms." LexLib The statutory authority for the Republic of the Philippines to enter into such a guarantee is found in Section 8 (b) of Republic Act No. 6395, as amended, which reads, insofar as pertinent: "Section 8, Authority to Incur Indebtedness and issue Bonds: Their Conditions, Privileges and Exemptions; Sinking Funds; Guarantee ." xxx xxx xxx "(b) Foreign Loans The Corporations is hereby authorized to contract loans, credits, in any convertible foreign currency, or capital goods, and indebtedness from time to time from foreign governments, or any international financial institution or fund source, or to issue bonds, in such amount and in any foreign currency, on such terms and conditions as it shall deem appropriate for the accomplishment of its purposes and to enter into and execute agreements and other documents specifying such terms and conditions." "The President of the Philippines, by himself, or through his duly authorized representative, is hereby authorized to negotiate and contract with foreign governments or any international financial institutions or fund sources, in the name and on behalf of the Corporations, one or several loans, for the purpose of assisting in the reconstruction, or promoting the development of the economy of the country.' " The President of the Philippines, by himself, or through his duly authorized representative, is hereby further authorized to guarantee, absolutely and unconditionally, as primary obligor and not as surety merely, in the name and on behalf of the Republic of the Philippines, the payment of the loans, credits, indebtedness and bonds issued up to the amount herein authorized, which shall be over and above the amount which the President of the Philippines is authorized to guarantee under Republic Act Numbered Sixty-one Hundred Forty-Two, as amended, as well as the performance of all or any of the obligations undertaken by the Corporation in the territory of the Republic of the Philippines pursuant to loan agreements entered into with foreign governments or any international financial institutions or fund source ." (Emphasis supplied). As regards the execution and delivery of the Guarantee Agreement on behalf of the Republic of the Philippines, the President of the Philippines, by Full Powers, dated January 10, 1983, has "designated and authorized" the Honorable Cesar Virata, Prime Minister and concurrently Minister of Finance, to "sign, execute and deliver for and in behalf of the Republic of the Philippines" the aforementioned Guarantee Agreement and "vested [him] with full and all manner of power and authority for this purpose". (Annex "A") Thus, the signature of Prime Minister Virata on the said Agreement is in pursuance of the authority conferred upon him by the President of the Philippines. LexLib Wherefore, after having examined closely the terms and conditions set forth in the subject Agreement in the light of pertinent provisions of law, the undersigned is of the opinion that the said Guarantee Agreement has been duly authorized and ratified by, and executed and delivered on behalf of, the Republic of the Philippines, and is legally binding upon the Republic of the Philippines in accordance with its terms. Very truly yours, For the Minister of Justice (SGD.) JESUS N. BORROMEO Deputy Minister of Justice