Chinese loan deals for river, dam projects legal – SC

MANILA, Philippines — The P15-billion loan agreements between the Philippine government and a Chinese bank to finance the Chico River Pump Irrigation and Kaliwa Dam projects have been declared “valid and not unconstitutional” by the Supreme Court.

In a decision released last Dec. 9, the SC said the twin petitions filed by the Makabayan bloc in 2019 failed to present compelling issues that might have convinced the high court to nullify the CRPIP (Chico River) and NCWS (Kaliwa Dam).

“In view of the foregoing disquisitions, petitioners have failed to present any compelling issue to warrant the nullification of the CRPIP and NCWS Loan Agreements, or any of its clauses,” the SC wrote.

“Also the Court cannot sustain such apprehensions as petitioners have failed to prove as fact the allegedly inequitable foreign laws, of which the courts do not take judicial notice. Well established in our jurisdiction is that foreign laws must be alleged and proven like any other material fact,” it added.

In 2019, Makabayan bloc members led by then-senatorial candidate Neri Colmenares asked the SC to strike down the government’s $211.21-million (P11.8 billion) and $62-million (P3.4 billion) loan agreement with China for the construction of the Kaliwa Dam and Chico River pump, respectively.

Colmenares and his group argued that the loans were invalid for violations of various constitutional mandates particularly the failure to secure the needed Monetary Board concurrence, in bypassing qualified Filipinos in favor of foreign project contractors, and for containing stipulations that defeat the state’s pursuit of an independent foreign policy.

“Relative to procurement laws, the award of projects to the foreign contractors and their consequent financing under the Loan Agreements are outside the purview of the GPRA and the 2016 Revised Implementing Rules and Regulations (2016 HM) effective at the time the CRPIP and NCWS projects were awarded,” the SC wrote.

“Given that these commercial relationships are contractual in nature, arbitration thereon is understood as a purely private system of adjudication facilitated by private citizens, which has been consistently recognized as valid, binding, and enforceable. Given such fundamental principles, courts should liberally construe arbitration clauses, adopting the interpretation that would render such clauses effective,” it continued. “Particularly, in contracts with a foreign element, the courts have generally respected the contracting parties’ stipulated choice of law.”