DOF exec: No assets waived in $62.09-M deal with China for Chico River project

While the Philippines waived its sovereign immunity in the $62.09-million loan agreement with China for the Chico River Pump Irrigation Project, the Department of Finance (DOF) on Tuesday clarified that there was no collateral included in the terms.

"No collateral was included in the loan agreement," Finance Assistant Secretary Antonio "Tony" Lambino II said in a text message.

He was referring to the 20-year loan deal which was inked by Finance Secretary Carlos Dominguez III and Chinese Ambassador to the Philippines Zhao Jianhua on April 10, 2018.

Over the weekend, Senior Associate Justice Antonio Carpio expressed concern over the loan agreement, as he said China could seize oil and gas-rich Philippine assets in the West Philippine Sea should the country default on payment.

"Like what is standard in loan agreements, we waived our sovereign immunity, which essentially means the lender has recourse if we don't pay back our loans," Lambino said in response.

He noted, however, that the Philippines did not waive the immunity of assets which are classified under the following:

• used by a diplomatic or consular mission of the Republic of the Philippines
• of a military character and under control of military authority or defense agency of the Republic of the Philippines
• located in the Philippines and dedicated to public or governmental use (as distinguished from patrimonial assets or assets dedicated to commercial use).

"Patrimonial assets are defined as things the State owns that have no public use or purpose or do not increase national wealth," said Lambino.

"I would ask Justice Carpio what he means because in a Supreme Court decision he penned in 2002, he said 'the government must formally declare that the property of public dominion is no longer needed for public use or public service, before the same could be classified as patrimonial property of the State," he elaborated.

Carpio earlier said, however, that the agreement is "governed by Chinese Law" and as such, the term "patrimonial assets and assets dedicated to commercial use" is defined under Chinese law, interpreted by a Chinese-majority tribunal in Beijing, and enforced by the Chinese Government in the Philippines."

The project was originally to be funded by the national government, but this was instead shifted the funding into official development assistance (ODA), which covers the construction of a diversion dam and intake works on the Chico river.

Lambino last year already defended the agreement with China, as he said the procurement of financing options for the project went through the proper procedure. — RSJ, GMA News