PH can ignore onerous terms of China loan – Locsin

April 4, 2019 at 15:41


PH can ignore onerous terms of China loan – Locsin

By: – Reporter | / 05:36 AM April 04, 2019

MANILA, Philippines — Foreign Secretary Teodoro Locsin Jr. has dismissed concerns that the Duterte administration had entered into disadvantageous contracts, especially loan agreements with China.

Locsin said the government could just ignore any provision it later deemed onerous even if the contracts had been signed.

Even if the other party sues and wins in arbitration, no Philippine court will recognize the award against the government, he said.

Locsin considered unprecedented President Rodrigo Duterte’s order to review all government contracts, including deals with China.


The President ordered the review earlier this week after Supreme Court Senior Associate Justice Antonio Carpio disclosed that the terms of the $62-million Chico River Pump Irrigation loan agreement would allow China to seize the oil-rich Recto (Reed) Bank in the West Philippine Sea if the Philippines failed to pay the loan.

Carpio questioned the government decision to allow the country’s “patrimonial assets and assets dedicated to commercial use” to serve as collateral for China when loan agreements did not normally require such provision.

The agreement for another China loan, the Kaliwa Dam project, has the same disadvantageous provision, according to him.

He expressed fear that the provision would be included in other loan agreements with China.

But according to Locsin, “all we have to do is ignore onerous provisions.”

“The other party can go blue suing the state; if they win an arbitration award it is unenforceable unless the courts recognize it, which they won’t for ousting the state of its sovereign character,” he tweeted on Tuesday night.

‘Kill them’

Locsin advised the government to go after the lawyers who crafted the questionable terms. “Kill them,” he said.

A lawyer himself, the foreign secretary recalled the Supreme Court ruling against the contracts entered into by the Ramos administration during the power crisis in the early 1990s that allowed the so-called independent power producers (IPPs) to charge consumers for electricity even if it was not used or produced.

“The doctrine today that government can just trash any provision already signed and legal if it is onerous came from a successful challenge to the IPPs’ ‘take or pay’ provision for electricity used or not, or even when the IPP cannot produce it,” he pointed out.

“Under SC doctrine on the thieving IPPs take or pay provision, the state can just fuck the investor’s provision excluding state regulation and say, ‘So sue us, fuck you. Settled jurisprudence,” he said.


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