Palace tells critics of China-funded Chico River project to set aside politics

MANILA, Philippines — Malacañang urged critics of the controversial loan deal for the Chico River pump irrigation project to set aside "politics" as it decried what it described as "pointless" discussions on the agreement. 

The $62-million project, which is expected to provide water supply to more than 8,000 hectares of agricultural land, was placed on the spotlight after Supreme Court Senior Associate Justice Antonio Carpio raised the possibility of China seizing Philippine patrimonial assets if the loan is not repaid. 

Carpio said patrimonial assets, or those that are nor for public use or public service or for the development of national wealth, include the gas reserves in Recto Bank, an area off Palawan also known as Reed Bank. 

READ: Carpio counters Panelo on Reed Bank as collateral in Chico River loan

Officials have denied that the Chico River loan would force the Philippines to surrender its territory or natural resources to China. They have also given assurances that the Philippines would not default on its loan. 

Presidential spokesman Salvador Panelo said farmers in Cagayan and Kalinga who would benefit from the Chico River project could not wait "'til kingdom come." 

"Let us set aside politics and give our farmers in northern Luzon a better life which they truly deserve," Panelo said in a statement issued last Wednesday. 

"Perhaps our critics should have instead done their part to contribute when they had every opportunity to do so, especially when they were holding the reins of the government," he added. 

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Panelo explained that only when the Philippines fails to repay its loan — a scenario that he described as "improbable if not impossible" — would the oil and gas in Recto Bank be used to settle any outstanding balance.

"What that means is that there will be an extraction of gas and oil, a sale of the same and then a portion of the profit therefrom, which will be in the form of money, will be used to pay and satisfy the balance," the presidential spokesman said. 

"Assuming we have defaulted for just a small amount of the loan, China cannot seize all the gas and oil there but only the equivalent of the unpaid loan. It cannot go beyond the outstanding balance," he added.  

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Panelo said the criticism and discussions on the loan agreement are "trivial, circuitous, and pointless" because the amount involved is "low" and the deal has an inflexible annual interest rate of 2 percent.

He said economic managers have also ensured that there are safeguards in case an arbitral award is made in favor of China. The safeguards include allowing Philippine courts to determine if there was partiality in the arbitration proceedings, if there was fraud or collusion, or if enforcing the award would be contrary to public policy.

Finance officials have said an arbitration may take place if the Philippines defaults on its loan with China. 

Panelo, Carpio exchange pleasantries 

Despite their opposing views on the Chico River loan, Panelo and Carpio exchanged pleasantries during a convention of lawyers Thursday in Iloilo City. 

Panelo took a photo of him and Carpio during the convention of the Integrated Bar of the Philippines, the official organization of all Philippine lawyers.

“Exchanged pleasantries. We are fraternity brods in the Sigma Rho in UP Law. He is junior brod. I was one of the senior brods who initiated him but not physical,” Panelo said.

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Carpio was quoted by reports as saying that he and the presidential spokesman met at breakfast because they were staying in the same hotel. 

"He (Panelo) is a fraternity brod, and we engage in the usual small talk, like what he said - how to invade China," the Supreme Court magistrate said. 

Panelo said Carpio's remark about China was just a joke.

"How to invade China is a joke, we both made it up to make the reporters who will ask us to laugh. We just exchanged pleasantries," he said. 

Panelo previously called Carpio "unpatriotic" for raising the possibility that China would seize the gas in Recto Bank if the Chico Dam loan is not repaid.