Carpio warns PH-China deal on Kaliwa Dam also offers patrimonial assets as collateral

Mike Navallo, ABS-CBN News

Posted at Mar 28 2019 05:41 PM | Updated as of Mar 28 2019 07:45 PM

ILOILO CITY- Supreme Court Senior Associate Justice Antonio Carpio on Thursday warned that the loan agreement between Philippines and China for the Kaliwa Dam project also offers patrimonial assets as collateral, which he said could mean Beijing is going after gas in the Reed Bank.

The China-funded project in Infanta, Quezon has been on the spotlight of late, identified as the possible long-term solution to the water supply problem in Metro Manila. 

Carpio said the deal bears terms similar with the Philippines' loan deal with China for the Chico River Irrigation project. 

“Our assets are also collateralized in that Kaliwa Dam. Patrimonial assets also. Different language but it means the same,” Carpio told reporters on the sidelines of the 17th Integrated Bar of the Philippines National Convention in Iloilo. 

Carpio, for long an advocate of Philippine sovereignty in the contested South China Sea, spoke about the maritime dispute at the forum. 

Carpio had earlier warned China could seize oil and gas in the Reed Bank -- estimated to hold up to 5.4 billion barrels of oil and 55.1 trillion cubic feet of natural gas -- in case the Philippines fails to pay its loan obligations.

During his lecture, Carpio reiterated his position that oil and gas in the Reed Bank are patrimonial assets.

“How can Forum Energy sell it if it’s not patrimonial?” he asked.

Patrimonial assets refer to properties owned by the State in its private capacity and not for the public, public service or intended for the development of national wealth.

In contrast, a property of public domain is outside the commerce of man and cannot be sold.

Carpio noted that like the Chico River project, arbitration in case of dispute in the Kaliwa Dam project will also be governed by Chinese laws, although arbitration will be held in Hong Kong.

He had earlier claimed the Philippines stands no chance of winning an arbitration case against China if it is held in Beijing, under a panel with Chinese arbitrators having the majority, governed by Chinese laws.

Carpio said the award in case of an arbitration ruling is enforceable in the Philippines without need of a court order, contrary to statements by Chief Presidential Legal Counsel and Presidential Spokesperson Salvador Panelo and Justice Secretary Menardo Guevarra that any foreign award needs to go through Philippine courts before it can be enforced.

“Under the Chico River Dam, we waive our sovereign immunity on the enforcement of the award. And we already recognize in advance the arbitral ruling. So there’s no need anymore to go the court for them for the recognition of foreign judgment,” he explained.

Carpio also addressed statements from the finance and justice departments that the amount of loan involved is just small.

“The first two loans, Chico and Kaliwa, are just the beginning. Because this is a total of $12 to $24 billion of several projects, so we have to be careful. We must remove all these provisions that are disadvantageous to us,” he said.

“The Chinese said a total of $24 billion [in] loans and investments when the President visited China... for the first say, let’s say it’s just $12 billion, it’s still huge,” he added.

He said copies of these agreements have now been uploaded in the website of the Department of Finance.

Carpio said the contracts may no longer be changed because they have been signed, unless China agrees to renegotiate.

“We can negotiate if China wants to negotiate. But if China doesn’t want to change, we’re stuck with it. We just make sure that we pay,” he said.

Asked if he would inhibit should a case against the allegedly onerous Chinese loan agreements be filed before the Supreme Court, Carpio said: “I don’t know when they’ll file because I’m retiring in October.”

A vocal critic of Chinese actions in the South China Sea, Carpio said he would continue his advocacy on the West Philippine Sea, the Philippines' exclusive economic zone in the South China Sea, after his retirement.

But he declined to comment on the communication filed by former Foreign Affairs Secretary Albert del Rosario and former Ombudsman Conchita Carpio-Morales before the International Criminal Court because a petition against the Philippines’ withdrawal from the ICC is still pending before the high court.

During his lecture, Carpio claimed China seized Sandy Cay from the Philippines in 2017 and that the administration is still "in denial."

Panelo was among those who attended his lecture. He stayed until the end and shook his hand as he returned to the table they shared. 

Panelo had called Carpio "unpatriotic" on Tuesday for allegedly pointing out loopholes in the country's loan agreements with China. Sought for comment, the magistrate laughed it off

Addressing the accusation, he said: "Well, I think you know I’d be the last person to be accused of that."