PHILIPPINES Law and Practice Contributed by: Kerwin Tan, Eugene Kaw and Veronica Balbin, Tan Hassani and Counsels
from the time the right of action accrues; otherwise, it will be barred by prescription. 2.7 Lease Assignment/Novation 2.7.1 Recognition of the Concepts of Contractual Assignment and Novation The Philippines recognises the concept of contractual assignment and novation found in the Philippine Civil Code. 2.7.2 Assignment/Novation of Leases Under Foreign Laws The parties are free to enter into a novation agree - ment pursuant to New York or English law. Whether the lessee’s consent will be required, or whether there are mandatory terms for such assignment, will depend on the governing law. The parties are free to stipulate their governing choice of law, so long as the terms and conditions of the lease are not contrary to law, morals, public policy or public order. 2.7.3 Enforceability of Lease Assignments/ Novations While not affecting validity, lease assignments and assumptions/novations involving an aircraft should be in English, and it is advisable for them to be notarised. If executed outside the Philippines, they should be apostilled or legalised for purposes of enforcement against a domestic party. 2.7.4 Filing/Registration of Lease Assignments/ Novations An aircraft and/or engine lease assignment and assumption/novation can be registered with the CAAP to be binding on third parties; otherwise, they shall be valid only between the parties and their successors and assignees. To register assignment or novation, the documents must be in English and notarised; if executed out - side the Philippines, they must be apostilled or legal - ised. Estimated completion time is about three to four weeks. Government applications or consents are not required before the execution and delivery of an aircraft and/
or engine lease assignment and assumption/novation in relation to an aircraft registered domestically. How - ever, while the assignment and assumption/novation themselves are 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 delivery of the aircraft or engine. 2.7.5 Taxes/Duties Payable on Assignment/ Novation There is no documentary stamp tax for executing a lease agreement for personal property such as an air - craft or engine, whether physically or electronically, nor for assigning the original lease agreement. 2.7.6 Recognition of Transfer of Ownership Interests Even if the entity ownership changes, there is no change in the ownership of the aircraft. The entity owning the aircraft is separate and distinct from any of its ownership interests (eg, shareholders). 2.8 Aircraft Deregistration and Export 2.8.1 Deregistering Aircraft in This Jurisdiction Deregistration can be done by the lessee. If a dereg - istration power of attorney is executed by the lessee in favour of the lessor, then the lessor may apply for the deregistration of an aircraft. If there is any annotation on the certificate of registra - tion of the aircraft, the applicant shall settle or clear all liens or encumbrances prior to deregistration; no aircraft registered with the CAAP shall be deregistered until all liens and encumbrances annotated on the cer - tificate of registration have been cancelled. An application for deregistration shall be filed at the Aircraft Registration Section, which will then forward the application to the legal department for review. Once reviewed by the legal department, it will then be forwarded to the Director-General for approval. In 2025, the CAAP issued a regulation updating the format of the deregistration certificate. In the updated format, there is now an express distinction between the identity of the operator and that of the owner. This
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