On 02 April 2019, Senatorial Candidate Erin Tañada called the directive from Malacañang for the Office of the Solicitor General and the Department of Justice to review all contracts entered into by the government to look for onerous or disadvantageous provisions, as “far too little, much too late.”

Tañada said, “Kahit ‘yung bagong abugado alam na ‘yung contract review nangyayari bago ‘yung signing, hindi after. Bakit pa magco-contract review, pirmado na ang mga ‘yan. This is the government admitting that they either did not do their due diligence before signing, or that they maliciously entered into agreements disadvantageous to the country.”  

In the past month, there has been widespread criticism of loan agreements entered into by the Duterte administration with the Chinese government. Various sectors have expressed concerns that these loans, which will be used to fund priority projects in the government’s infrastructure development program, will lead the Philippines into a so-called “debt trap,” i.e. a creditor nation creating an unsustainable level of debt in another nation with the intention of using this as leverage to extract concessions, assets, and resources from the debtor.  

Earlier today, Supreme Court Senior Associate Justice Antonio Carpio asserted that the waiver of sovereign immunity in Chinese loans funding the Kaliwa Dam and Chico River projects was unheard of in Official Development Assistance (ODA) contracts between states and multilateral lenders. 

Similar ODA-funded projects between the Philippines and Japan, South Korea, and the World Bank do not contain similar provisions. 

Because of this waiver, Justice Carpio expressed fears that China might be able to gain control of Philippine assets in the event of a default. The last time the country defaulted on its loans was in 1983, when the dictatorial regime of Ferdinand Marcos declared a moratorium on payments to foreign creditors because the Central Bank did not have sufficient foreign currency to service its debts. 

Tañada also criticized the Chinese loan contracts for containing confidentiality clauses prohibiting the disclosure of information without prior written consent: “This violates the constitutional right of the people to access official records and documents. Hindi naman yata tama ‘yan. Pinapabayad na nga sa taong-bayan ang mga utang na ito, bawal pang ipagbigay-alam sa kanila, kung walang pahintulot ng Tsina, ang detalye binabayaran nila. At the very least, China should try to observe the rules for responsible lending established by the OECD. This is one of the main reasons why I pushed for the Freedom of Information Act. The Filipino people need to be informed and protected.”   

China is not a member of the Organisation for Economic Co-Operation and Development (OECD), which publishes standards and rules on responsible lending by creditor nations and the implementation of ODA projects. 

LORENZO ‘ERIN’ TAÑADA III is the former Deputy Speaker of the House of Representatives. He either authored or pushed for bills that helped improve the working and living conditions of Filipino workers and farmers and their families. Some of the more significant legislative measures advocated by Erin were: Peoples’ Survival Fund, Universal Healthcare Act, Condonation of SSS Penalties on Delinquent Contributions, among others. He intends to champion a nationwide minimum wage standard, apart from the Coco Levy Fund, when elected to the Senate.