PH doesn’t have to repay NorthRail loan, says lawyer

Lawyer Harry Roque

One of the critics of the North Luzon Expressway project with China said Thursday the government should not repay its $500 million loan from China, because the deal was void from the start.

Lawyer Harry Roque, who was among those who had filed a pending suit to nullify the NorthRail contract, said a deal that violated the law was invalid from the get-go.

And under the Philippine Civil Code, a contract that is null and void does not need to be paid, Roque said.

“If our government and [Finance] Secretary [Cesar] Purisima pays it that would be a violation of the antigraft law. It is very clear in the Civil Code that a contract that is null and void must not be paid,” said Roque in a Quezon City media forum.

He also said a Supreme Court ruling and a Commission on Audit report had both noted defects in the NorthRail contract with China.

He said China would be able to recover the money it had forwarded for the NorthRail project only if it could prove that it was a “builder in good faith.”

But, he said, China could no longer claim good faith because, early on, there had been a court case against the project for alleged irregularities and questions about its compliance with Philippine procurement laws.

Bayan Muna party-list Rep. Neri Colmenares also said the Philippines should not have given in to China’s demand for payment, stressing that the contract between the two countries was illegal.

“This contract must be annulled because our consent to the loan was vitiated by fraud and is no different to the voidable contracts under the… Civil Code,” Colmenares said.

Roque said that if the Philippines paid the $500 million just to ease the tension between the two countries brought on by a sea dispute, that would be tantamount to succumbing to China’s bullying.

Relations between the two nations have been strained the past months over China’s claims to islands within the Philippines’ exclusive economic zone.

Amid the tension, China asked for payment of the $500 million it had already shelled out for the NorthRail project that was aborted.

Interior Secretary Manuel Roxas, whom President Aquino recently sent to China as a special envoy, said the demand for payment did not stem from the territorial dispute but from the Philippine Supreme Court’s ruling that the NorthRail contract with the Chinese was not immune from suit.

In light of the high court ruling, the case questioning the validity of the contract and the loan agreement between the Department of Finance and ChinaEximbank would continue.

But Roxas said Purisima had made arrangements to repay the loan in tranches in two years.

The NorthRail project, which was intended to link Metro Manila with northern Luzon by rail, had been questioned from the start because it did not go through a public bidding, its cost appeared bloated, and there were no detailed plans of the project before the deal with China was made. Leila B. Salaverria