MANILA, Philippines — Malacañang downplayed yesterday the warning of Supreme Court Senior Associate Justice Antonio Carpio that the P3.69-billion loan for the Chico River pump irrigation project in Kalinga would put the Philippines at risk of losing the oil-rich Recto (Reed) Bank should it default on the loan.
Presidential spokesman Salvador Panelo said the contract – deemed onerous by some legal luminaries – should not be a cause for alarm because “we never defaulted from any obligations to any international organization with respect to loans of our country.”
“Palagi naman tayong nagbabayad eh (We always pay)… We are known for paying our obligations… We will never renege,” he said.
Panelo also justified the terms of the loan, saying Beijing always has the last say as creditor.
“They have been asking why the contract is favorable to China. Why? Do we have a say when we borrow? When we loan from the bank, it’s always the terms of the bank,” he said in English and Filipino.
According to Carpio, the loan agreement for the Chico River pump irrigation project has a provision that reads: “In case of default by the Philippines in repayment of the loan, China can seize, to satisfy any arbitral award in favor of China, ‘patrimonial assets and assets dedicated to commercial use’ of the Philippine government.”
Carpio said under paragraph 8.1 of the loan agreement, the Philippines waived any sovereign immunity over all its assets except properties of Philippine embassies and missions, assets of a military character under the control of the local military and assets located for public or government use as distinguished from patrimonial ones and those dedicated for commercial use.
Carpio said in case of dispute, arbitration shall be held in Beijing with Chinese as majority members of the panel.
Panelo said it is just natural for Beijing to make sure that they will not be disadvantaged after providing the loan that was signed on April 10, 2018. – With Paolo Romero, Cecille Suerte Felipe