SC voids 2005 oil search deal; ruling lauded as ‘a warning to Marcos’ | Inquirer News

SC voids 2005 oil search deal; ruling lauded as ‘a warning to Marcos’

By: - Reporter / @santostinaINQ
/ 06:00 AM January 11, 2023

Supreme Court logo over the SC building

MANILA, Philippines — The Supreme Court has declared void and unconstitutional a 2005 agreement that allowed China and Vietnam to conduct a joint exploration with the Philippines for oil resources in areas under the country’s jurisdiction in the West Philippine Sea (WPS).


Voting 12-2-1 on Tuesday, the high court en banc ruled that the Joint Marine Seismic Undertaking (JMSU) was “unconstitutional for allowing wholly-owned foreign corporations to participate in the exploration of the country’s natural resources without observing the safeguards provided in Section 2, Article XII of the 1987 Constitution.”

The decision was penned by Associate Justice Samuel Gaerlan, with the concurrence of Chief Justice Alexander Gesmundo and 10 other magistrates.


Associate Justice Amy Lazaro-Javier and Associate Justice Rodil Zalameda dissented, while Associate Justice Ramon Paul Hernando did not take part as he was on leave, according to the court’s Public Information Office (PIO).

The case stemmed from the petition filed in 2008 by former Bayan Muna Representatives Satur Ocampo, Teodoro Casiño, and five other lawmakers, which asked the tribunal to void the tripartite agreement among China National Offshore Oil Corp., Vietnam Oil and Gas Corp., and the Philippine National Oil Co.

The respondents in the case were led by then-President Gloria Macapagal-Arroyo.

The JMSU, which covered an exploration area of 142,886 square kilometers in the South China Sea, was signed in March 2005 and expired in July 2008.

‘Relevant as ever’

In a statement on Tuesday, Casiño said the court may have taken 14 years to resolve the matter but the ruling was “relevant as ever” in view of President Ferdinand Marcos Jr.’s apparent plan to enter into another exploration deal with China in the WPS.

“May this be a warning to Mr. Marcos not to trifle with the constitutional provisions that reserve the exploitation of our natural resources exclusively to Filipinos and under the full supervision and control of the Philippine government,” Casiño said.

The petitioners questioned the JMSU for violating the constitutional provision which holds that the exploration, development and utilization (EDU) of the country’s natural resources should be under the full control and supervision of the state.


The JMSU was illegal, they said, for allowing foreign corporations wholly owned by China and Vietnam to undertake a large-scale exploration of the country’s petroleum resources.

The Constitution, they stressed, reserves the EDU of natural resources to Filipino citizens or to corporations or associations where at least 60 percent of the capital is owned by Filipinos.

In defense of the deal, the respondents maintained that the provision invoked by the petitioners was inapplicable since the JMSU only involved “pre-exploration activities,’’ not an EDU.


But the high court noted that the term “exploration” pertains to a search or discovery of something in both the ordinary or technical sense of the word. It also cited a portion of JMSU text which read: “Parties expressed desire to engage in a joint research of petroleum resource potential of a certain area of the South China Sea as a pre-exploration activity.”

“[I]t is clear that the JMSU was executed for the purpose of determining if petroleum exists in the Agreement Area,” the decision said, as quoted in a summary released by the PIO.

“That the Parties designated the joint research as a ‘pre- exploration activity’ is of no moment. Such designation does not detract from the fact that the intent and aim of the agreement is to discover petroleum which is tantamount to exploration,” it added.


Bayan Muna Chair Neri Colmenares, who served as counsel for the petitioners, had assailed the JMSU for undermining the national interest when it “treacherously offered 142,886 sq m of the West Philippine Sea, including 24,000 sq km of areas that indisputably belong to the Philippines and not contested by China.”

“China became aggressive after the JMSU because it managed to pinpoint the exact location of natural gas and oil reserves in the area,” Colmenares said.

In a tweet, former Bayan Muna Rep. Carlos Isagani Zarate called Tuesday’s court ruling a win for Philippine sovereignty.

“Bayan Muna filed this petition as far back as 2008 as China has been using JMSU as cover in its unbridled exploration and incursion in our territory, particularly in the West Philippine Sea,” he said.

On July 12, 2016, the arbitral tribunal ruled to invalidate China’s historic claims to nearly the entire South China Sea demarcated by its so-called nine-dash line, which included the West Philippine Sea, waters within the country’s 370-kilometer exclusive economic zone.

Marcos trip

Beijing refused to participate in the arbitration and continues to ignore the arbitral award despite international pressure.

In 2018, China and the Philippines pledged to jointly explore oil and gas assets in the West Philippine Sea.

But the talks failed and in June, shortly before Mr. Marcos assumed the presidency, outgoing Foreign Secretary Teodoro Locsin Jr. said discussions had been terminated as a result of constitutional limits and sovereignty issues.

During President Marcos’ visit to Beijing last week, Chinese President Xi Jinping told the Philippine leader that Beijing was ready to resume oil and gas talks with Manila and to handle maritime issues in a friendly and consultative manner.

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