The provision in a P3.6-billion loan agreement allowing China to seize patrimonial assets of the Philippines if the country failed to pay its debt is a standard clause in such contracts, Malacañang said on Monday.
Presidential spokesperson Salvador Panelo said he saw nothing wrong with the provision as he expressed confidence that the Philippines will be able to pay off the loan.
Asked at a press briefing if it was logical for the Philippines to put up its natural resources as collateral, Panelo said, “What I’m saying is the onerous conditions that some are saying incorporated in the contract is standard between lender and borrower to be sure that the lender will be getting what they have lent to the borrower.”
Panelo said the lender could not be blamed if it would impose certain conditions favorable to its interest
“Hindi ba’pag nag-uutang tayo, meron ba tayong say? When we [take out a] loan from the bank, it’s always the terms of the bank. Natural lang iyun na they will make sure na hindi sila malulugi sa kanilang ipinautang sa atin,” Panelo said.
Supreme Court Senior Associate Justice Antonio Carpio warned over the weekend that in case of default, China could seize, to satisfy any arbitral award in favor, patrimonial assets and assets dedicated to commercial use of the Philippine government.
Carpio said that the term “patrimonial assets and assets dedicated to commercial use” includes the rich gas fields in the Reed Bank, which is within the Philippines’ exclusive economic zone in the South China Sea.
Panelo dismissed Carpio’s dire scenario saying the Philippines had always been a responsible borrower.
“It’s not a possibility because we will never renege. We’re known for paying our obligations. Ang liit lang naman,” Panelo said.
The 20-year loan deal for the Chico River Pump Irrigation Project was inked by Department of Finance Secretary Carlos Dominguez III and China’s Ambassador to the Philippines Zhao Jianhua on April 10, 2018.
The project will provide a stable supply of water to around 8,700 hectares of agricultural land, benefit 4,350 farmers and their families and serve 21 barangays in the provinces of Kalinga and Cagayan in Northern Luzon once completed.
The P3.6-billion loan had been described by former Bayan Muna party-list Representative Neri Colmenares as “onerous” and highly favorable to China.
The Palace however said the project had been examined and approved by the Investment Coordinating Committee. It was also approved by the Monetary Board.
It also said that based on the Department of Finance’s report on procurement, China gave a list of three contractors of good standing. The implementing agency was also given the opportunity to vet and request for a replacement if needed. —NB, GMA News
