PHILIPPINES Law and Practice Contributed by: Kerwin Tan, Eugene Kaw and Veronica Balbin, Tan Hassani and Counsels
2.9.7 Imposition of Moratoria in Connection With Insolvency Proceedings The Commencement Order of the rehabilitation pro - ceedings shall include a stay or suspension order, which shall: • suspend all actions or proceedings, in court or otherwise, for the enforcement of claims against the debtor; • suspend all actions to enforce any judgment, attachment or other provisional remedies against the debtor; • prohibit the debtor from selling, encumbering, transferring or disposing in any manner any of its properties, except in the ordinary course of busi - ness; and • prohibit the debtor from making any payment of its liabilities outstanding as of the commencement date, except as may be provided therein. 2.9.8 Liquidation of Domestic Lessees Voluntary Liquidation An insolvent debtor (or lessee) may apply for a liquida - tion by filing a petition for liquidation with the court, establishing its insolvency. Involuntary Liquidation This may be used by three or more creditors (or les - sors) whose claims in aggregate are at least PHP1 million or at least 25% of the subscribed capital stock of the debtor (or lessee), whichever is higher. An insolvent domestic lessee may be placed under administration or receivership in the circumstances listed in 2.9.2 Overview of Relevant Types of Vol- untary and Involuntary Restructurings, Reorganisa- tions, Insolvencies and Receivership . 2.9.9 Ipso Facto Defaults Ipso facto defaults, or the termination of a contract by reason of a party’s insolvency, are recognised in the Philippines, and are usually stipulated in contracts. There is no need for the debtor to be in default in the performance of their obligation. If the lease agreement provides that the contract will be terminated once the lessee is deemed insolvent, then the lessor may take possession of the aircraft. However, this assumes that
the lessee co-operates, as there is no self-help in the Philippines (otherwise, the lessor should proceed with the dispute resolution mechanism in the lease). 2.9.10 Impact of Domestic Lessees’ Winding-Up If the domestic lessee is wound-up, then the lease contract shall be terminated and the aircraft must be returned to the lessor. All other matters pertaining to rentals, security deposits and maintenance reserves would be decided by the court, taking into account the unique circumstances of the lessee’s case. 2.10 Cape Town Convention and Others 2.10.1 Conventions in Force At the time of writing, the Philippines has not ratified the Convention on International Interests in Mobile Equipment nor the related Protocol on Matters spe - cific to Aircraft Equipment. 2.10.2 Declarations Made Concerning Conventions See 2.10.1 Conventions in Force . 2.10.3 Application of Article XIII of the Protocol on Matters Specific to Aircraft Equipment Philippine courts have no experience in enforcing the Convention on International Interests in Mobile Equip - ment, as the Philippines has not ratified said Conven - tion. 2.10.5 Other Conventions The Philippines is a party to the 1948 Geneva Con - vention on the International Recognition of Rights in Aircraft. However, it is not a party to the 1933 Rome Convention on the Unification of Certain Rules relating to the Precautionary Arrest of Aircraft. 3. Aircraft Debt Finance 3.1 Structuring 3.1.1 Restrictions on Lending and Borrowing There are no express statutory restrictions on foreign lenders financing an aircraft in the Philippines, nor on borrowers using the loan proceeds. However, due to the doctrine of “doing business” in the Philippines, See 2.10.1 Conventions in Force . 2.10.4 Enforcement of Conventions
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