SC asked to void $211-million China loan agreement for Kaliwa Dam

By Jeffrey Damicog

The Supreme Court (SC) has been asked Thursday to void for being unconstitutional China’s $211-million loan grant to the Philippines for the construction of the Kaliwa Dam Project.

(L-R) Senatorial candidate, Bayan Muna Chairman Neri Colmenares and Bayan Muna Party-List Rep. Carlos Zarate (MANILA BULLETIN)
(L-R) Senatorial candidate, Bayan Muna Chairman Neri Colmenares and Bayan Muna Party-List Rep. Carlos Zarate (MANILA BULLETIN)

This was sought by the Makabayan bloc of the House of Representatives in the petition for prohibition they filed which asked for the issuance of a temporary restraining order (TRO) or a writ of preliminary injunction against the Preferential Buyer’s Credit Loan Agreement between Export-Import Bank of China (EXIMBANK) and the Philippine government for the New Centennial Water Source-Kaliwa Dam Project.

The petitioners were Bayan Muna Chairman and senatorial bet Neri Javier Colmenares; Bayan Muna party-list Rep. Carlos Isagani Zarate; Anakpawis party-list Rep. Ariel Casilao; Gabriela party-list Reps. Emmi De Jesus and Arlene Brosas; Act Teacher’s party-list Reps. Antonio Tinio and France Castro; Kabataan party-list Rep. Sarah Jane Elago; and groups Bagong Alyansang Makabayan, Kalipunan ng Katutubong Mamamayan ng Pilipininas, Center for Environmental Concerns, Kalikasan People’s Network, Agham Advocates of Science and Technology for the People, and Protect Sierra Madre.

EXIMBANK agreed to lend the Government of the Philippines (GRP) $211,214,646.54 representing 85 percent of the financing needs under the Kaliwa Dam Project.

The Metropolitan Waterworks and Sewerage System (WMSS) said the project was meant for the development of new water source in order to meet the increasing water demand by constructing a redundant dam for Metro Manila’s domestic water supply.

In the petition, the petitioners also asked the SC to order the government to produce procurement documents in granting the civil works to the Chinese contractor of the project and other relevant documents in connection with the case.

Among their arguments, the petitioners pointed out the loan agreement “contains express waivers by the government of the Philippines of its sovereign immunity from execution of its vital assets of the Borrower (MWSS) located within the Philippine territory.”

“This could include private lands, which under the 1987 Constitution could be transferred or conveyed only to Philippine citizens or corporations,” said the petitioners.

“Since the Chinese Government, being a foreign entity, is not qualified to acquire or hold lands in the Philippines, then the provisions on the collateralization of territorial property therefore runs counter to the Constitution,” they stressed.

The petitioners also indicated that under the agreement, in the event of a dispute, arbitration shall be conducted in accordance with the Hong Kong International Arbitration Centre (HKIAC) HKIAC arbitration rules and that “arbitral award shall be final and binding upon parties.”

“By doing so, Respondents swept aside the Constitution and gravely abused their discretion. It is clear that the choice of proper law of the Loan Agreement and the choice of tribunal are manifestly and grossly disadvantageous to the Philippines and one-sided in favor of China,” said the petitioners.

“Under these circumstances, it will be impossible for Respondents to defend the lack of impartiality or neutrality expected of a tribunal in arbitration proceedings,” they added.

The loan agreement already named Chinese contractor Energy Engineering Corporation Limited to do the project which the petitioners argued violates the Constitution which provides that in granting rights, privileges and concessions covering the national economy and patrimony “the State shall give preference to qualified Filipinos.”

“This is just a water source project. Since there are many qualified Filipino contractors, some building larger projects than this and using Filipino labor, they should have been included in the bidding of the project,” they said.

Citing the Government Procurement Reform Act, the petitioners also emphasized that: “All Procurement shall be done through Competitive Bidding, except as provided for in Article XVI of this Act.”

Named as respondents in the petition were President Rodrigo Duterte, Executive Secretary Salvador Medialdea, MWSS Administrator Reynaldo Velasco, Department of Finance (DOF) Secretary Carlos Dominguez III, National Economic and Development Authority (NEDA) Secretary Ernesto Pernia, Government Corporate Counsel Elpidio Vega, and Justice Secretary Menardo Guevarra.