Metro Manila (CNN Philippines, March 25) — Presidential Spokesperson Salvador Panelo said he sees nothing wrong with offering natural resources as "collateral" to loan agreements with China.

In his media briefing Monday, Panelo responded to a Supreme Court justice's claim that China may seize the country's "patrimonial assets" such as the Reed bank gas fields if the government defaults on the Chico River Pump Irrigation Project in the North.

The spokesperson shrugged off the concern, saying it will never happen as the government will be able to pay off its "obligations" with lenders.

"I don't see anything wrong because I know it will never happen; that is precisely why perhaps the economic managers who entered into the contract know that it will never happen," Panelo told reporters in Malacañang.

Over the weekend, Senior Associate Justice Antonio Carpio warned that "in case of default by the Philippines in repayment of the loan, China can seize, to satisfy any arbitral award in favor of China, patrimonial assets and assets dedicated to commercial use."

Carpio, citing Paragraph 8.1 of the loan agreement, said the country "expressly waived any sovereign immunity over all its assets."

These may pertain to oil and gas resources in the exclusive economic zone in the West Philippine Sea, including the gas-rich Reed bank.

Panelo said it is a "standard" for lenders to impose certain rules in contracts with borrowers to ensure that they will not be at a loss.

"Natural lang 'yun that they will make sure na hindi sila malulugi sa kanilang pinautang sa atin," Panelo said. (It's natural for them to do such thing so that they will make sure that they will not lose what they lent us.)

"But as I said, we never did not pay our loans. Lahat ng loans binayaran natin, kaya siguro malakas ang loob natin. Alam naman nilang makakabayad tayo, so parang useless provision 'yun," he added.

[Translation: We have paid all our loans, that's why perhaps we have the guts to still borrow. They know we can pay, so maybe it's a useless provision.]

The Chico River project straddling Kalinga and Cagayan provinces broke ground in June 2018. It is among six bilateral agreements signed in April last year.

'Resources not collateral'

The Finance Department disputed claims that some of the country's assets are being used as collateral for loan agreements with China.

"We absolutely have not waived anything with regards to these properties through the loan agreement," Finance Assistant Secretary Tony Lambino told CNN Philippines. "No collateral with our loan agreements. That means our creditors do not have any guarantee to any asset that we have."

The department is also confident the country will not default on its loan deal with China on the Chico River project.

Opposition senatorial candidate and Magdalo Represenative Gary Alejano meanwhile called on Malacañang to publicize the natural resources the present administration has agreed to use as collateral for Chinese loans.

"We are already witnessing how many countries have fallen into the debt trap of China and lost control of their patrimonial assets. We should not let our country suffer the same fate," Alejano said in a statement.

Bayan Muna chairman and senatorial candidate Neri Colmenares earlier tagged the multi-billion loan agreement as a "one-sided" deal between the two countries-saying that it could turn out to be a "disaster for the Philippines."

The Finance Department, however, shrugged off the warning, saying there was no basis for the claim.

READ: Filipinos have 'neutral' trust in China - SWS