Supreme Court to Palace: Answer petition on Chico River loan agreement

BAGUIO CITY, Philippines — The Supreme Court (SC) yesterday ordered the executive branch to answer a petition of militant lawmakers to strike down the government’s $62-million loan agreement with China for the Chico River irrigation pump project in the Cordillera region.

In summer session, justices decided to require the Palace and several departments to submit their comment on the petition filed last week by party-list lawmakers from militant groups under the Makabayan bloc led by senatorial candidate Neri Colmenares seeking to nullify the loan agreement for being unconstitutional.

The Court gave respondents – Executive Secretary Salvador Medialdea, Finance Secretary Carlos Dominguez III, National Economic and Development Authority head Ernesto Pernia and Justice Secretary Menardo Guevarra – 10 days from receipt of notice to comply with the order, according to SC spokesman Brian Hosaka.

Presidential spokesman Salvador Panelo said they would comply with the SC order.

The SC opted not to immediately rule on the plea of petitioners for issuance of a temporary restraining order stopping the implementation of the loan agreement.

The petition questioned the loan deal wherein the Philippines stands to lose natural gas deposits in Recto (Reed) Bank as a collateral in case of loan default.

Petitioners alleged that the agreement violates several provisions of the 1987 Constitution as it contains an express waiver of sovereign immunity over the country’s patrimonial assets in favor of China.

They said the contract specifically violates Article XII, Section 2 of the Charter, which reads: “All lands of the public domain, waters, minerals, coal, petroleum and other mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna and other natural resources are owned by the State. With the exception of agricultural lands, all other natural resources shall not be alienated. The exploration, development and utilization of natural resources shall be under the full control and supervision of the State.”

They said the assailed provisions of the agreement also violate Article II, Section 7 of the Constitution, which states: “The State shall pursue an independent foreign policy. In its relations with other states the paramount consideration shall be national sovereignty, territorial integrity, national interest and the right to self-determination.”

Colmenares and company further stressed that this constitutional provision was violated by the “choice of China International Economic and Trade Arbitration Commission (CIETAC) as tribunal and the choice of Chinese law as the governing law of the agreement.”

Petitioners likewise assailed the confidentiality clause in the agreement, which they said was “a brazen disregard of the constitutional right of the Filipino people to information on foreign loans obtained or guaranteed by the government and is considered inimical to the national interest” under Article XII, Section 21 of the Constitution.

The group added that the contract violated the constitutional preference for qualified Filipinos and existing procurement laws.

Lastly, they claimed that the loan agreement violated Article VII, Section 20 of the Constitution, which requires prior approval by the Monetary Board.

Petitioners cited the case of Ecuador, which was forced to grant China control of 80 percent of its oil produce after it defaulted on a Chinese loan for its Coca Codo Hydro Dam. They also cited the case of Sri Lanka which surrendered to China the control of its Hambantota port also after failing to pay its loan.

Colmenares was joined by Bayan Muna Rep. Carlos Zarate, Anakpawis Rep. Ariel Casilao, Gabriela Reps. Emmy de Jesus and Arlene Brosas, ACT Teachers Reps. Antonio Tinio and Francisca Castro and Kabataan Rep. Sarah Jane Elago in filing the petition.  

Stop Chico project loan

Meanwhile, debt watchdog Freedom from Debt Coalition (FDC) is calling on the Duterte administration to reconsider the China-funded Chico River project as well as the planned construction of the P18.7-billion Kaliwa Dam in Quezon province.

At a press conference in Quezon City yesterday, officials of the FDC said that aside from the potential massive destruction of the rich biodiversity in the proposed project sites as well as the displacement of indigenous groups, the mega projects also open the country’s assets and resources to seizure by China.

FDC president Rene Ofreneo said their group’s review of both loan agreements revealed questionable provisions that endanger the Philippines’ sovereignty over its assets.

Ofreneo said Section 8.1 of both loan contracts states that in the event of arbitration, the Philippine government “irrevocably waives immunity on the grounds of sovereignty” over its “patrimonial assets or assets dedicated to commercial use.”

Section 8.4 of both loan contracts, Ofreneo said, also states that the agreement itself and the rights and obligations of both parties “shall be governed by and construed in accordance with the laws of China.”

He said these are all on top of the China loans’ higher interest rate of two percent – as compared to the 0.25 percent to 0.75 percent being offered by Japan – in addition to commitment fee of 0.3 percent and management fee of 0.3 percent. –  With Elizabeth Marcelo, Christina Mendez