DOJ Opinion No. 163, s. 1980

DOJ OPINION NO. 163 , s. 1980 November 14, 1980 Bank of Montreal Asia Limited 27th Floor, UIC Building 6 Shenton Way Singapore 0106 as agent of the bank and financial institutions named as Leaders in the Loan and Guaranty Agreement referred to below RE : Loan and Guaranty Agreement date as of October 13, 1980 Gentlemen : In behalf of 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 among Philippine Airlines, Inc. (the "Borrower"), the Lenders, the Guarantor, the manager named therein (the "Manager") and yourselves as agent for the Lenders (the "Agent") dated as of October 13, 1980 (the "Loan and Guaranty Agreement") providing for a loan to the Borrower in the aggregate amount of up to Seven Million Eight Hundred Thousand United States Dollars (US$7,800,000) evidenced by promissory notes substantially in the form provided for by the Loan and Guaranty Agreement (the "Notes"). LibLex All terms used herein shall have the meanings set forth in the Loan and Guaranty 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 my satisfaction of all such corporate and officials records of the Borrower and of 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 Loan and Guaranty Agreement, including the Schedule 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) Facsimile of the Notes evidencing the initial Drawdown scheduled for November 25, 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 November 12, 1980 accepting his appointment as the agent of the Borrower and/or the Guarantor for service of process under the Loan and Guaranty Agreement; (f) the applications to and approvals of the following governmental ministries and agencies of the Republic: (1) Full powers issued by the President of the Philippines dated October 13, 1980 to Minister of Finance Cesar Virata in respect to the Loan and Guaranty Agreement; (2) Letters of the Central Bank dated July 14, 1980, July 30, 1980, August 20, 1980 and October 2, 1980 authorizing and approving the Loan and Guaranty Agreement True and correct copies of the applications to and approvals of such ministries and agencies are attached to this opinion; (g) the Borrower's notice of Drawdown; 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 originals, and the conformity with the originals 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 of 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 Loan and Guaranty Agreement, to execute and deliver the Loan and Guaranty 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 Loan and Guaranty Agreement and all the documentation thereunder. Mr. Cesar Virata, Minister of Finance of the Guarantor, was duly authorized to sign the Loan and Guaranty 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 Loan and Guaranty Agreement. (3) There is no Constitutional, Civil Code or treaty provision, law, ordinance, decree, regulation, statute or similar enactment and no contractual or other obligation relating to External Indebtedness binding on the Guarantor, nor any guideline or policy statement applicable to the Guarantor that is or will be contravened by the execution and delivery of this Agreement, the Letter Agreements or the Notes or by the performance or observance of any of the terms thereof. (4) All authorizations, approvals, consents and licenses from all legislative bodies or government agencies necessary in order for the Guarantor (i) to give the guaranty provided for in the Loan and Guaranty Agreement, (ii) to execute and deliver the Loan and Guaranty Agreement and to execute all other documents and instruments to be delivered thereunder, (iii) to perform and observe the terms and conditions thereof and (iv) to make all payments in Dollars as required thereunder, have been obtained and continue in full force and effect. (5) The obligations assumed by the Guarantor in and under the Loan and Guaranty Agreement constitute the legal, valid and enforceable obligations of the Guarantor binding upon the Guarantor in accordance with terms of the Loan and Guaranty Agreement. The obligations of the Guarantor thereunder are and will be direct, unconditional and general obligations of the Guarantor for the payment and performance of which the full faith and credit of the Guarantor is pledged. (6) The Guarantor is neither in breach of nor in default under any agreement, 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 Loan and Guaranty Agreement will not be or result in a breach of any mortgage, deed, contract or agreement to which the Guarantor is a party or by which the Guarantor may be bound. (7) The obligations of the Guarantor under the Loan and Guaranty Agreement rank at least pari passu with all other existing unsecured External Indebtedness of the Guarantor. At the date hereof there is no External Indebtedness of the Guarantor which is accrued 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 to secure its purchase price 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. (8) To the best of my knowledge, there are no pending or threatened legal actions or arbitration or other proceedings which may materially affect the financial condition of the Guarantor or the validity or enforceability of the Loan and Guaranty Agreement or any of the Letter Agreements or the Notes. (9) 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 the IMF. (10) The execution, delivery and the performance of the Loan and Guaranty Agreement and the Guaranty by the Guarantor constitute private commercial acts rather than governmental or public acts. The Guarantor has agreed not to claim immunity from legal proceedings with respect to itself 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 Loan and Guaranty Agreement, the Letter Agreements, the Notes or any related documentation or for the attachment of property or the execution of any judgment with respect thereto. The Guarantor's waiver of any such rights to sovereign immunity with respect to itself and all of its property contained in Section 13.06 of the Loan and Guaranty Agreement is irrevocable and binding on the Guarantor. (11) There are no income or other taxes or charges of the Republic or any political subdivision or taxing authority thereof or of any taxing authority, federation or association of which the Republic is a member, imposed by withholding or otherwise, applicable to any payment to be made by the Guarantor or to any amounts to be received by any of the Lenders, the Managers or the Agent pursuant to the terms of the Loan and Guaranty Agreement, the Letter Agreements or the Notes or to be imposed on or by virtue of the execution, delivery, performance or enforcement of the Loan and Guaranty Agreement or any of the Letter Agreements of the Notes. The obligation of the Guarantor to make all payments due under the Loan and Guaranty Agreement and each of the Letter Agreements and the Notes free and clear of any such present or future tax, withholding or charge so that each Lender, the Manager and the Agent shall receive the amounts due it as if no such tax, withholding or charge had been imposed is valid, binding and enforceable. None of the Lenders, the Managers or the Agent shall be deemed to be resident, domiciled, to have established a place of business or to be carrying on business in the Republic solely by reason of the execution, delivery, performance or enforcement in such jurisdiction of the Loan and Guaranty Agreement or any related documentation. (12) Under the laws of the Republic, the choice of New York law to govern the validity, construction and performance of the Loan and Guaranty Agreement, the Letter Agreements and the Notes and 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 District Court for the Southern District of New York 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 Loan and Guaranty Agreement in the event that a judgment were 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 court of the Republic by suit on the judgment, subject only to defenses based on want of jurisdiction, want of notice, collusion, fraud, or clear mistake of law or fact. The fact that the Loan and Guaranty Agreement, the Letter Agreements or the Notes may be executed or delivered in the Republic or any political subdivision thereof does not alter the foregoing opinion. (13) Other than the filing of an executed copy of the Loan and Guaranty Agreement with the Central Bank, it is not necessary or advisable under the laws of the Republic in order to assure the validity, effectiveness or enforceability of the Loan and Guaranty Agreement and each of the Letter Agreements and the Notes, or any part thereof, that any such agreement or instrument be filed, registered or recorded in any public office or elsewhere or that any other instrument relating thereto be executed, delivered, filed, registered or recorded. (14) The transactions contemplated by the Loan and Guaranty Agreement are not subject to any currency deposit requirements or any reserve requirements of whatsoever nature under the laws of the Republic. (15) Under Section 25 of the Public Act as Amended, the Borrower is exempt from any taxes, fees, imposts, and other charges imposed by the Republic on the Loan Agreement, the Letter Agreements or the Notes. Very truly yours, For and By Authority of the Minister of Justice: (SGD.) JESUS N. BORROMEO Deputy Minister of Justice