PHILIPPINES Law and Practice Contributed by: Kerwin Tan, Eugene Kaw and Veronica Balbin, Tan Hassani and Counsels
If ownership interests (eg, shares) in the entity owning the aircraft are acquired by another entity, there is no change in aircraft ownership: the aircraft will still be owned by the same entity as registered owner, regard - less of any change in its ownership. The entity itself has a separate and distinct legal personality from the ownership interest. 1.2.2 Sales Governed by English or New York Law The transfer of title to an aircraft or engine physically delivered in the Philippines will be recognised, even if such transfer of title is governed by English or New York law. The Philippines courts will recognise the parties’ choice of law as provided in the bill of sale so long as it is not contrary to law, public policy or public order. The bill of sale should be in English and notarised. If executed outside the Philippines, it should be apos - tilled or legalised in order to be enforceable in the Philippines. 1.2.3 Enforceability Against Domestic Parties While the lack of translation, notarisation or legalisa - tion does not affect the validity of the sale, it is advis - able for documents executed outside the Philippines to be apostilled or legalised for enforceability in the Philippines. 1.2.4 Registration, Filing and/or Consent From Government Entities The bill of sale (and its supporting documents) should be lodged with the Philippine aviation authority. If the bill of sale and supporting documents were executed outside the Philippines, they should be apostilled or legalised in order to be accepted by government agencies. The estimated period is about three to four weeks. Generally, no government applications or consents are required as a prerequisite to the execution and delivery of a bill of sale in relation to an aircraft or engine registered in the Philippines. However, while the bill of sale itself is generally not affected, if the aircraft or the engine was acquired through or with a special tax status, certain consents may be required
from the relevant government entity prior to the deliv - ery of the aircraft or engine. 1.2.5 Taxes/Duties Payable Upon Execution of a Bill of Sale Generally, for foreign sellers, if the bill of sale is exe - cuted outside the Philippine jurisdiction and the air - craft is outside the Philippine territory, a sale will not be subject to income tax since it is considered as income from outside the Philippines.
2. Aircraft and Engine Leasing 2.1 Overview 2.1.1 Non-Permissible Leases
Operating/wet/finance leases are generally accepted and recognised in the Philippines. Leases concerning only aircraft engines or parts are common and not prohibited; hence, they can be registered. 2.1.2 Application of Foreign Laws A lease involving a domestic party or asset situated in the Philippines can be governed by a foreign law. The High Court of the Philippines has recognised the validity of the choice of law by the parties. 2.1.3 Restrictions Concerning Payments in US Dollars There are no material restrictions on domestic lessees making payments in US dollars. However, it would be prudent to review the payment process with the domestic bank, which would normally require proof of the transaction. 2.1.4 Exchange Controls There are generally no exchange controls in the Philip - pines that could prevent rent payments under a lease, nor any repatriation of a realisation of proceeds. How - ever, for foreign loans, the Bangko Sentral ng Pilipinas (ie, the central bank of the Philippines) has regulations if the borrower wishes to purchase foreign exchange from Philippine banks for loan payments. In a more recent update, there has been a further relaxing of the requirements set out in such regulations.
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