Palace: Philippines to honor contracts with Chinese investors

By Genalyn Kabiling and Roy Mabasa

The government will continue to honor contracts with Chinese investors as it is "satisfied" with an arbitral decision upholding the country's sovereign rights over the West Philippine Sea, Malacañang said on Wednesday.

Presidential spokesman Harry Roque said the government will proceed with trade and investment ties with China and set aside matters of concern that "can't be resolved perhaps within our lifetime” for the meantime.

The Palace had earlier announced that all China-backed projects, including the Sangley Airport project, will push through as planned despite the United States' move to blacklist several Chinese firms engaged in the reclamation works in the disputed South China Sea.

"We will respect the contracts that we entered into with Chinese companies," Roque said over CNN Philippines Wednesday.

"There is already a decision that the Philippines has sovereign rights where they built the artificial islands and that means whoever built those artificial islands had no legal basis to do so. We are satisfied with that decision," he said when asked if the Philippines is following the US blacklist of Chinese firms to show its opposition to the building of artificial islands in the disputed territory.

Roque maintained that only the Philippines, having the sovereign rights over the West Philippine Sea, is the only nation allowed to build any structure within the territory.

"For as long as that decision stands, we can proceed forward on matters that we think we can push on such as trade and investments and meanwhile set aside matters that cannot be resolved perhaps in our lifetime," he said.

"But we are satisfied that the UN tribunal for the law of the sea ruled that only the Philippines could have built those artificial islands because they form part of our exclusive economic zone," he added.

In July, 2016, an arbitration court ruled in favor of the Philippines in the South China Sea dispute after it nullified China's nine-dash claim over the resource-rich waters. Beijing, however, has refused to recognize the decision and continued its reclamation works in the disputed area. 

Locsin agrees

Foreign Affairs Secretary Teodoro Locsin Jr. on Wednesday backpedaled on his suggestion to rescind the contracts of Chinese companies that were earlier sanctioned by the United States for involvement in the artificial island-building in the West Philippine Sea or the South China Sea.

Locsin’s sudden turn-around came after President Duterte declared that all projects, “regardless of which Chinese contractor is involved” will continue, citing national interest as the reason.

“President is right: A sovereign choice. Also, if we break a contract, we get sued abroad,” the country’s top diplomat said in a tweet.

Locsin noted a breach of contract that happened in the North Rail project during the time of the Arroyo administration when the Philippines terminated the project with China due to alleged serious legal issues in the contract.

“Happened even with an anomalous North Rail contract. We lost the case I believe. At best we can adopt prospectively but I wouldn’t encourage it,” the foreign secretary said in the tweet he posted at exactly 8:07 a.m. on Wednesday. He later deleted the tweet.

One of the Chinese companies mentioned in the US sanction was the state-owned China Communications Construction Company (CCCC) that bagged the $10-billion Sangley Point International Airport project in partnership with Lucio Tan’s MacroAsia Corp.

The US government alleged that CCCC was one of the many companies involved in the controversial reclamation and construction of military posts in the South China Sea.

Malacañang said Duterte will not follow the lead of the United States because the Philippines is a free and independent nation and in need of the projects from China.

“We are not a vassal state of any foreign power,” palace spokesman Harry Roque said.