MALACAÑANG has conceded the Philippines did not have a choice but to agree to controversial provisions in the loan agreements the country signed with China, especially on the $62-million Chico River Pump Irrigation Project, although it assured the public that the country will never default on paying its debts.
Presidential Spokesman and Chief Presidential Legal Counsel Salvador S. Panelo also saw nothing wrong with the terms of the loan agreements that the country agreed to, even if this could mean that China could seize natural gas deposits in Reed Bank in case of a default by the Philippines in repayment of the loan.
“…They have been saying why the contract is in favor of China? Why not? Do you think we have a say when we loan? When we loan from the bank, it is always the terms of the bank, it is natural that they will make sure that they will not lose the money that they lent us,” Panelo said in a Palace briefing on Monday, noting that what the critics are pointing out to be “onerous” provisions are just “standard.”
Nonetheless, the Palace spokesman also said the country will never renege on paying its debts, so it is “not a possibility” that China can seize gas in Reed Bank as alleged by Supreme Court Senior Associate Justice Antonio Carpio.
“As I said, we never did not pay our loans. All those loans we paid them. That is why those who entered into the contract…know that we will be able to pay, so it is a useless provision,” he said.
No assured claim on asset
The Department of Finance also reiterated on Monday that they did not declare anything as collateral in the loan agreement and that the creditor has no assured claim on any asset.
Finance Undersecretary Antonio Joselito G. Lambino II said a 2002 Supreme Court ruling penned by Carpio said the “government must formally declare that the property of public dominion is no longer needed for public use or public service, before the same could be classified as patrimonial property of the State.”
“In the Supreme Court ruling, he [Carpio] says that the State must declare something as patrimonial property before it is considered as such. So Reed Bank and any other asset is public property unless the government or the legislature declares otherwise—and we have made no such declaration regarding Reed Bank,” Lambino said in a text message shared with reporters.
Last Friday, Carpio warned that China can seize “patrimonial assets and assets dedicated to commercial use” of the Philippine government, including the gas fields in the Reed Bank that are within the Philippine exclusive economic zone in the West Philippine Sea.
Patrimonial assets refer to those owned by the State in its private or proprietary capacity, such as those that are not intended for public use, or for some public service, or for the development of the national wealth.
Under Article 8, paragraph 8.1 of the loan agreement on the Chico River Pump Irrigation Project, the Philippines “irrevocably waives any immunity on the grounds of sovereign or otherwise for itself or its property in connection with any arbitration proceeding.”
The exceptions cited under the agreement include those assets used by a diplomatic or consular mission of the Republic of the Philippines, those assets of a military character and under control of a military authority or defense agency of the Republic of the Philippines and those assets located in the Philippines and dedicated to a public or governmental use.
Aside from waiver of immunity provision, Carpio has also raised alarm over the questionable terms of arbitration and the confidentiality clause under the agreement.