SC affirms PH deal with China, Vietnam in SCS unconstitutional

The Supreme Court (SC) on Wednesday affirmed with finality its ruling declaring the 2005 Tripartite Agreement for the Joint Marine Seismic Undertaking (JMSU) among Philippines, China and Vietnam in the South China Sea as unconstitutional.

The High Court en banc said the motion for reconsideration on its January 10, 2023 ruling , filed through the Office of the Solicitor General, lacked merit.

The deal was among China National Offshore Oil Corporation, Vietnam Oil and Gas Corporation, and Philippine National Oil Company involving an area in the South China Sea covering 142,886 square kilometers.

“The motion for reconsideration merely repleaded the issues raised in the comment and memorandum, which the Court had already passed upon in the assailed Decision. The assailed Decision declared the JMSU 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 Supreme Court said.

It added the JMSU is unconstitutional as it involves the "exploration of natural resources."

It also noted that since the objective of the JMSU as stated in its Fifth Whereas Clause is “to engage in a joint research of petroleum resource potential in the Agreement Area, the agreement clearly involved exploration."

The SC stressed in its January 10, 2023 ruling that for the JMSU to be valid, it must be "executed and implemented" under any of the following modes: one, directly by the State; two, through coproduction, joint venture or production-sharing agreements with Filipino citizens or qualified corporations; three, through small-scale utilization of natural resources by Filipino citizens; and four, through agreements entered into by the President with foreign-owned corporations involving technical or financial assistance for large-scale exploration, development, and utilization of minerals, petroleum, and other mineral oils.

"The JMSU does not fall into the first three modes since it involves foreign-owned corporations. For an agreement/contract under the fourth mode to be valid, it must foremost be entered into by the President himself or herself. In the case at bar, the President is neither a party nor a signatory to the JMSU and the contracting party is PNOC," it said.

Further, the SC said that the Philippine government had no full control and supervision under the JMSU since Articles 11.2 and 11.4 of the undertaking provides that PNOC allowed joint ownership of information about the Philippines’ natural resources in the Agreement Area with China and Vietnam.

This joint ownership of information about the Philippines’ natural resources, the High Court said, is illegal.

Associate Justice Samuel Gaerlan penned the Resolution, which
was concurred in by 11 other Associate Justices. Associate Justices Amy
Lazaro-Javier and Rodil Zalameda maintained their dissent, while Chief Justice Alexander Gesmundo, who was on official leave, did not participate.

The SC ruling stemmed from the 2008 petition filed by Bayan Muna and other parties questioning the legality of the JMSU.  The groups cited Article 12, Section 2 of the Philippine Constitution which states that, “All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries and other natural resources are owned by the State” and that “with the exception of agricultural lands, all other natural resources shall not be alienated.”

The same constitutional provision also states that “the exploration, development, and utilization of natural resources shall be under the full control and supervision of the State, and that the State may directly undertake such activities, or it may enter into co-production, joint venture, or production-sharing agreements with Filipino citizens, or corporation or associations at least sixty per centum of whose capital is owned by such citizens.”—LDF, GMA Integrated News