Drilon says review of government contracts should be done with caution

Senator Franklin Drilon on Wednesday expressed his support to review proposed contracts with private and foreign entities, but noted that this should be done with caution and not to harass.

"In general, I am in favor of reviewing these proposed contracts with China and other bilateral or multilateral international agencies, like World Bank and Asian Development Bank, etc," he said in an emailed statement.

His statement comes a day after President Rodrigo Duterte ordered the Solicitor General and the Department of Justice to review all contracts entered into by the government including the loan agreements with China.

"But I must caution that existing and binding contracts cannot simply be classified as onerous and canceled... The government must avail of the procedure outlined in the contract," warned Drilon.

According to Drilon, a former justice secretary, to do otherwise would constitute a breach of the country's obligations under the contract as this would have legal and financial implications.

"The government must respect the sanctity of the contracts. Otherwise, no country or entity would enter into contracts with us because we cannot be trusted to honor our obligations," he said.

Looking ahead, Drilon backed calls to review loan agreements with China, especially those involving the Chico River Dam and the Kaliwa Dam.

"Let us review and expose the terms. We owe it to the public, because it is the public, through their taxes, who will pay the loan," said Drilon.

In 2014, the Kaliwa Dam project was initially rolled out as a PPP project, with two qualifying bidders for the project — SMC-K Water Consortium (San Miguel Holdings Corp. and Korea Water Resources Corp.); and the Abeima-Datem Consortium (Albeinsa Infraestructura Medio Ambiento S.A and Datem Inc.)

The project involves the development of a new water source in order to meet the increasing water demand by constructing a redundant dam for Metro Manila's domestic water supply.

The government, however, under the administration of President Rodrigo Duterte, in March 2017 chose to instead push through with the project under an ODA scheme.

Finance Secretary Carlos Dominguez III in 2017 signed a financing agreement for the Kaliwa Dam where China will provide soft loans estimated at $234.92 million covering Phase 1-Kaliwa Dam and Phase 2-Laiban Dam.

The final loan agreement was scheduled to be signed by government officials of both the Philippines and China in November 2018.

Just last month, Senior Associate Justice Antonio Carpio expressed concerns over the loan agreements, specifically over the  P3.6-billion Chico River irrigation loan agreement, saying that China could later seize oil and gas-rich Philippine assets should the country default on payment.

Malacañang has since said that allowing China to seize patrimonial assets of the Philippines should the country fail to pay its debt is a standard clause in such contracts.

Presidential Spokesperson Salvador Panelo also called Carpio "unpatriotic" for pointing out the pro-China provisions in the loan agreement.

Meanwhile, the DOF last week said the Philippines did not waive its assets as collateral in the said loan agreement. —LDF, GMA News