By Hannah Torregoza
Even though he supports the Duterte government’s move to review all contracts and loan agreements entered into by the government, Senate minority leader Franklin Drilon said extreme caution should be exercised in implementing the President’s directive.
Drilon, a former justice secretary, said the government should carefully assess existing and binding contracts as these cannot simply be classified as onerous and cancelled. Doing so, he said, would represent a clear breach of contract.
“In general, I am in favor of reviewing these proposed contracts with China and other bilateral or multilateral international agencies, like World Bank and Asian Development Bank, etc.,” Drilon said in a statement.
“But I must caution that existing and binding contracts cannot simply be classified as onerous and cancelled. The government must avail of the procedure outlined in the contract,” the minority leader emphasized.
Drilon warned that to do otherwise would constitute a breach of the country’s obligations under the contract. He added that it would have legal and financial implications.
“The government must respect the sanctity of the contracts. Otherwise, no country or entity would enter into contracts with us because we cannot be trusted to honor our obligations,” he said.
The senator explained that the principle on sanctity of contracts dictates that once parties duly enter into a contract, they must honor their obligations under it.
Thus, it is incumbent upon the government to exercise caution in entering into a contract, considering the existence of such legal doctrine, Drilon pointed out.
If the government thinks a contract duly executed is disadvantageous or onerous, Drilon said it can “renegotiate its terms, go to court for its reformation, or terminate the same in accordance with the procedure laid down in the contract, subject to the consequences provided in the agreement.”
Drilon said the government could bring it to the Ombudsman if it violates the anti-graft law. He also said that the power to review contracts must not be used to harass.
Earlier, the minority leader backed calls to review the loan agreements that the Philippines signed with China, including the Chico River Dam and Kaliwa Dam project.
According to Drilon, it is important that the government ensures that these agreements are not disadvantageous to the country or that they will not place the country in a debt trap.
“Let us review and expose the terms. We owe it to the public, because it is the public, through their taxes, who will pay the loan,” he said.