MANILA Critics of the terms of the Philippine government's loan from China for the Chico River Project are simply "jumping the gun," Justice Secretary Menardo Guevarra said Tuesday, as he dismissed fears being raised by some quarters in case the government defaults on its obligations as being far-fetched.
"We are too well ahead of what may happen. I think we really don't have much to worry," Guevarra said. "According to the DOF (Department of Finance), there is nothing unusual about this contract. It's something like a template that has been used in so many other loan agreements. So, I guess we are just really worrying too much."
"I don't think we even have to think about that problem in the future because the intention of the government is to honor all of its loan obligations," Guevarra added, following government critics sounding the alarm of a possible takeover of the gas-rich Reed Bank (Recto Bank) in case the Philippines defaulted on its PHP3.69-billion loan for the Chico River Project.
Senior Associate Justice Antonio Carpio, citing provisions of the loan agreement, claims the contract for the Chico River project "is expected to be the template for all other Chinese loans to the Philippines."
Under paragraph 8.1 of the loan agreement, the Philippines expressly waived immunity over all its assets except those used properties of Philippine embassies and missions; those under Philippine military control; and those assets for public or governmental use as distinguished from patrimonial assets and assets dedicated to commercial use.
Guevarra explained that the seizure of the Reed Bank is "far-fetched" because even if, "assuming for the sake of argument" there will be a default, there are mechanisms in place to be followed such as restructuring of the loan or the arbitration.
Under the agreement, the arbitration will be held in Beijing and will be governed by the rules of the China International Economic and Trade Arbitration Commission (CIETAC).
"An arbitral ruling will have to be validated by a Philippine court. So, hindi yun diretsong enforcement agad [there is no immediate enforcement]. Any foreign judgment including an arbitral ruling will have to be enforced by a petition in a proper Philippine court," he said. (PNA)
Source: Philippines News Agency