MANILA – The Philippines automatically pays its debts and is, thus, unlikely to default on its loans to China, a senator said Tuesday.
Senate Minority Leader Franklin Drilon downplayed concerns that China could seize oil and gas deposits in the West Philippine Sea, the country’s exclusive economic zone in the disputed South China Sea, if the Philippines is unable to pay its debt.
Drilon said Presidential Decree No. 1177 mandates automatic appropriations for debt servicing, which means the Philippines will always pay its loans.
“So that provision on patrimonial property being held to pay for these debts will never happen,” Drilon said.
Supreme Court Senior Associate Justice Antonio Carpio warned last Friday that the loan agreement with China allows it to seize gas deposits in Reed Bank (Recto Bank) if the Philippines is unable to pay the $62-million loan for the Chico River Irrigation project.
But Drilon said PD 1177 makes this improbable.
“This theoretical exposure of our patrimonial property to foreclosure is just theoretical,” Drilon added.
Sen. Panfilo Lacson meanwhile said that while the government will always pay its loans, he did not agree with any loan provision that makes the country’s natural resources as collateral.
“But to say na puwedeng i-collateralize ‘yung patrimonial assets, mukhang may mali yata dun. Dun ako hindi mag-a-agree,” Lacson said.
The Department of Finance insisted on Tuesday that the government did not offer any of the country’s natural resources as collateral for the project.
Last year China said its loans to the Philippines come “with no strings attached,” belying claims that Beijing had asked Manila for natural resources as loan collateral.
China has continued militarization and island-building activities in the South China Sea, undermining conflicting claims of the Philippines, Vietnam, Malaysia, Brunei and Taiwan to parts of the resource-rich waters.
It has ignored a July 2016 ruling of a United Nations-backed tribunal invalidating its 9-dash line claim over nearly all of the South China Sea, a landmark decision in response to a Philippine complaint.
President Rodrigo Duterte has set aside the ruling in pursuit of closer ties with China. (ABS-CBN News)