PHILIPPINES Law and Practice Contributed by: Kerwin Tan, Eugene Kaw and Veronica Balbin, Tan Hassani and Counsels
3.1.8 Syndicated Loans The concept of agency and the role of an agent (such as the facility agent) under a syndicated loan are rec -
great care must be taken to properly structure the transaction such that the foreign lender is not seen to be doing business in the Philippines without a licence. 3.1.2 Effect of Exchange Controls or Government Consents There are generally no exchange controls in the Phil - ippines that could prevent rent payments under a guarantee or security. However, 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. 3.1.3 Granting of Security to Foreign Lenders There is no restriction in the Philippines on grant - ing security to foreign lenders. Borrowers may pro - vide security under the PPSA for personal or mov - able property, or under Republic Act No 4882 for real property. 3.1.4 Downstream, Upstream and Cross-Stream Guarantees Downstream, upstream and/or cross-stream guaran - tees in favour of the lenders are recognised in the Philippines. However, care should be taken to review the corporate documents of the entities involved to ensure that issuing a guarantee does not violate their charter or constitutive documents. 3.1.5 Lenders’ Share in Security Over Domestic SPVs The lender may take a share security over a domestic special purpose vehicle that will operate the financed aircraft. 3.1.6 Negative Pledges Negative pledges are recognised in the Philippines. 3.1.7 Intercreditor Arrangements No restrictions or requirements are imposed on inter - creditor arrangements in the Philippines. However, Philippine law provides for the priority of creditors in certain situations.
ognised in the Philippines. 3.1.9 Debt Subordination
The Philippine Civil Code provides for the claims that must be preferred over others. The FRIA also provides that, in cases of liquidation in rehabilitation plans, the priority established under the Civil Code on the con - currence and preference of credits shall be followed. 3.1.10 Transfer/Assignment of Debts Under Foreign Laws The transfer or assignment of all or part of an out - standing debt governed by English or New York law is permissible and recognised in the Philippines. Parties are free to agree on terms and conditions that are not contrary to law, morals, public policy or public order. 3.1.11 Usury/Interest Limitation Laws Philippine usury law is currently suspended, and the lender and the borrower can agree on any interest that may be charged on the loan. However, courts may strike down interest rates that are iniquitous or unconscionable. 3.2 Security 3.2.1 Typical Forms of Security and Recourse If an aircraft is financed, it generally means that the lessor is still the owner of the aircraft, even though it will be operated by the lessee. The ownership of the lessor is usually annotated on the certificate of regis - tration of the aircraft, to notify the public of the identity of the lessor. A corporate guarantee is also usually taken out, to ensure the timely payment of the rent. 3.2.2 Types of Security Not Available The Civil Aviation Authority Act does not expressly provide for types of security that cannot be taken over
an aircraft or related collateral. 3.2.3 Trust/Trustee Concepts
The concept of trust and the role of a security trustee are recognised in the Philippines. The Philippine Civil Code expressly includes provisions on the establish - ment of a trust. However, as a practical matter, trust
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