Supreme Court urged to stop, void PH-China irrigation loan deal

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Metro Manila (CNN Philippines, April 4) — A petition was filed before the Supreme Court on Thursday to temporarily stop the implementation and eventually void the allegedly onerous irrigation project loan deal between the Philippines and China.

Members of the Makabayan bloc in the House of Representatives asked the high court to issue a temporary restraining order to halt the ₱3.69-billion Chico River Pump Irrigation Project, which has a loan component with a 2 percent interest rate. They said the project, which will begin construction in July, violates the Constitution.

The petitioners, led by Makabayan senatorial candidate Neri Colmenares, said the loan deal has a confidentiality clause "violative of the Constitution that provides for the right to information of the Filipino people on foreign loans contracted by the government." They said the loan deal was approved after the fact by the Monetary Board, which does not conform to the law that requires prior concurrence.

The group said the loan agreement binds the Philippines to a Chinese arbitration tribunal, which will be officiated by Chinese arbitrators using Chinese laws.

Article 8.4 of the China-funded loan deal states the project agreement shall be "governed by and construed in accordance with the laws of China." If the two countries figure in a dispute, they can opt to go to arbitration. For the Chico River project, China International Economic and Trade Arbitration Commission will handle the arbitration, which will take place in Beijing, China.

The loan deal also contains an express waiver of sovereign immunity over the country's patrimonial assets in favor of a foreign government.

Senior Associate Justice Antonio Carpio has issued a warning that "in case of default by the Philippines in repayment of the loan, China can seize, to satisfy any arbitral award in favor of China, patrimonial assets and assets dedicated to commercial use." He said these assets may pertain to oil and gas resources in the exclusive economic zone in the West Philippine Sea, including the gas-rich Reed bank.