PHILIPPINES Law and Practice Contributed by: Kerwin Tan, Eugene Kaw and Veronica Balbin, Tan Hassani and Counsels
3.2.9 Domestic Registration of Security Assignments Governed by Foreign Laws
arrangements in the Philippines are not as sophisti - cated as in other countries. 3.2.4 Assignment of Rights to an Aircraft by a Borrower to a Security Trustee A borrower can assign its rights to the aircraft or under an aircraft lease pursuant to a security assignment or a mortgage. It is advisable to register such assignment with the CAAP and to annotate it in the certificate of registration of the aircraft. 3.2.5 Assignment of Rights and Benefits Without Attendant Obligations When the lessor assigns their rights over the leased aircraft to an assignee, the lessor still holds owner - ship over the leased aircraft. The lessor remains as the lessor and, as such, is still required to comply with the obligations of the lessor as provided for in the aircraft lease. 3.2.6 Choice of Foreign Law The parties are free to stipulate their choice of law that will govern the security assignment, so long as the choice of law and the terms and conditions of the security assignment are not against law, morals, public order or public policy. 3.2.7 Formalities/Mandatory Terms to Create and Perfect Security Assignments The security assignment shall be in writing and notarised. If executed outside the Philippines, it must be apostilled or legalised in order to be enforceable in the Philippines. If written in any language other than English, the security assignment should also be accompanied by an English translation. The security assignment shall then be registered with the CAAP and annotated in the certificate of registra - tion of the aircraft in order to bind third persons. 3.2.8 Domestic Law Security Instruments There is no domestic law security instrument that a financier should take in addition to a security agree - ment that is governed by English of New York Law. The Philippines has not ratified the Cape Town Con - vention.
A security assignment governed by English or New York law and a domestic law security instrument may be registered with the CAAP. Any of the documents related to the security instru - ment that are executed outside the Philippines must be apostilled or legalised in order to be registered with the CAAP, and must be annotated in the certificate of registration of the aircraft in order to bind third per - sons. 3.2.10 Transfer of Security Interests Over Aircraft/ Engines The transfer of security interests over an aircraft and/ or engines is recognised in the Philippines. It is advis - able to register such transfer with the CAAP, and with the PPSR for engines. 3.2.11 Effect of Changes in the Identity of Secured Parties Subrogation of a third person in the rights of a credi - tor is either legal or conventional. Legal subrogation takes place without the agreement of the parties but by operation of law. However, in conventional subrogation, the consent of the original creditor, the original debtor and the third person who is subrogated to the rights of the original creditor must be obtained. In effect, the original obli - gation will be extinguished and a new obligation shall be made between the person subrogated of the rights of the original creditor and the original debtor. The original creditor can assign their rights over the security agreement to a third person without the con - sent of the debtor. The original security will not be extinguished or modified. Nevertheless, in both subrogation and assignment, the security interest will not be jeopardised. 3.2.12 “Parallel Debt” Structures There is no express prohibition on the use of “parallel debt” structures in the Philippines. They can be used so that the security trustee has an independent right
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