Govt to review all contracts with private firms in Philippines

MANILA, Apr 3, 2019, PhilStar. President Duterte has ordered a review of all government contracts with private firms, including foreign-based, in a sweeping directive covering controversial projects funded by China, reported the Philippine Star.

Duterte instructed all agencies to “check and review” all deals entered into by the government with private firms during a Cabinet meeting last Monday at Malacañang, presidential spokesman Salvador Panelo said yesterday.

The Department of Justice (DOJ) said it has formed teams to undertake the review.

“The Chief Executive… instructed all agencies to check and review all contracts entered into and remove onerous provisions that might be detrimental to the lives of the Filipinos,” Panelo said at a press briefing yesterday.

“He reiterated his vow to protect the people of the Republic of the Philippines,” he added.

Panelo said all existing contracts would be subjected to scrutiny to determine if there are provisions that violate the Constitution or are disadvantageous to the government.

While business groups are for policy predictability, Panelo said potential investors have nothing to worry about if they are not into anomalous dealings with government.

“No, I don’t think so,” he said when asked of the possibility that Duterte’s directive might scare off investors. “As I have said sometime ago, the considerations being looked at by potential investors are, one, the peace and order situation; the lack of bureaucracy or bureaucratic red tape; and the business climate,” the spokesman said.

“In fact, it will forewarn them that they cannot enter into any agreement that is in violation of the Constitution or a public policy,” he added.

Duterte’s directive came more than a week after he threatened to terminate the contracts of water concessionaires Manila Water and Maynilad because of water service interruptions that dogged parts of Metro Manila and Rizal province.

It also came on the heels of Supreme Court Senior Associate Justice Antonio Carpio’s raising the alarm on the controversial loan deals with China, saying the country’s patrimonial assets were being used as collateral in the Chico River Irrigation Pump Project.

Manila Water, which provides water service to Metro Manila’s east zone, has apologized for the crisis.

Duterte has given water regulator Metropolitan Waterworks and Sewerage System (MWSS) and the two concessionaires until April 10 to submit a report on the crisis. The President is expected to decide on the fate of the water concessionaires’ contracts by April 15.

DOJ-led teams

Justice Secretary Menardo Guevarra said the review teams would be composed of state counsels and state solicitors.

“We have organized teams to conduct this review but my office as attorney general will need a lot of help from the Office of the Solicitor General (OSG) to perform and complete this task at the soonest time possible,” he revealed in a text message yesterday.

“Priority contracts for review include concession agreements on public utilities and foreign loan contracts. Target provisions are those perceived to be onerous, one-sided, disadvantageous to the government, and or contrary to public order or public policy,” he said.

The DOJ chief cited the possibility of legal actions, including rescinding contracts found to be onerous.

“Contracts are subject to the will of the parties, but any stipulation, term or condition that is contrary to law, morals, public order or public policy may be abrogated or terminated,” Guevarra stressed.

Asked if the review would include recently signed China loans, Panelo said: “Well definitely, every contract.”

The Chinese government had expressed willingness to provide $9 billion in soft loans to the Philippines during Duterte’s first visit to China as President in 2016.

Critics, however, are wary about the possible consequences of the Philippines’ reliance on Chinese loans, considering the Asian giant’s encroachment on the Philippines’ territorial waters.

Another China-funded project on the spotlight is the P12.2-billion Kaliwa Dam, which some local officials and civil society groups claimed would cause flooding and displace communities in Quezon province.

Malaysian Prime Minister Mahathir Mohamad had even advised the Philippine government to be very careful when securing Chinese loans.

Finance officials have assuaged fears the loans were disadvantageous to the Philippines, saying they have lower interest rates and fees and longer grace periods compared with the financing packages obtained by the previous administration.

They have also clarified that none of the pipeline projects funded with official development assistance from China allow for the appropriation or takeover of domestic assets in the event of a default.

The finance department expects the Philippines’ debt to China to constitute only about 4.5 percent of the total debt by 2022, when most of the funding for infrastructure projects shall have been accessed.

While the Chico River pump irrigation and the Kaliwa Dam deals are also covered by the review, Panelo stressed the two China-funded projects had passed through scrutiny of the Commission on Audit and the finance department.

“We can always go back to it; but as far as the Department of Finance is concerned, it’s aboveboard and they have explained extensively at that,” he said.

With Edu Punay

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