Malacañang on Monday said it sees nothing wrong with using the country’s natural resources as collateral for loans from China, saying that such terms are “standard” between lenders and borrowers.
Presidential Spokesman Salvador Panelo issued this statement after Supreme Court Senior Associate Justice Antonio Carpio warned that China could seize natural gas deposits in Reed Bank (Recto Bank) if the Philippines fails to pay the $62-million Chinese loan for the Chico River irrigation project.
“This is... standard in [a] contract whenever our country gets loans from other countries,” he said, adding that “you cannot also blame the lender” if he imposes “certain terms that are favorable towards them.”
Panelo added that the country has always repaid its loans so that the provision on a possible default is “useless.”
He said there is no possibility that China will seize the Reed Bank as Carpio suggested.
“To me, it’s not a possibility because we will never really renege [on the loan payments]. It has never happened to us. We are known for paying our obligations,” he said.
The loan agreement, signed on April 10, 2018, states 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 of the Philippine government.”
Panelo said he was confident that the country could repay the loan. It can only rescind it if there is fraud.