Philippines sea exploration deal with Beijing, Hanoi ruled unconstitutional

The Philippines Supreme Court on Tuesday declared a 2005 South China Sea oil exploration agreement with China and Vietnam unconstitutional because it allowed foreign corporations to prospect for natural resources belonging to the Filipino people but without proper safeguards. 

The ruling went against the Joint Seismic Marine Undertaking deal, which was signed 18 years ago by the Philippine National Oil Co. (PNOC), the China National Offshore Oil Corp., and the Vietnam Oil and Gas Corp. (PETROVIETNAM). 

“The court ruled that the JSMU is 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 court said in a statement.

That section states that all lands of public domain, as well as waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, “and other natural resources are owned by the state.”

The court released its decision while the justices were on a retreat in the northern mountain city of Baguio and as China sought to revive an oil exploration deal with President Ferdinand Marcos Jr. His predecessor, Rodrigo Duterte, terminated talks with Beijing as both nations continued to be locked in a territorial dispute in the South China Sea. 

During a state visit to Beijing last week, Marcos and Chinese President Xi Jinping agreed to resume talks about oil and gas exploration in the South China Sea at “an early date,” both sides said.

It was not immediately clear how the Supreme Court ruling would affect that agreement. 

Among those who joined Marcos on his visit to China was former President Gloria Macapagal-Arroyo, whose administration signed the exploration deal with China and Vietnam.

The deal covered about 80% of Philippine territorial waters and was designed to conduct seismic exploration in an area encompassing nearly 150,000 square km. (57,900 square miles) west of Palawan island.

The ruling noted that a constitutional provision mandates that the “exploration, development, and utilization of natural resources shall be under the full control and supervision of the state.” Twelve justices approved the decision while two dissented and one abstained.

“The state may directly undertake such activities, or it may enter into co-production, joint venture, or production-sharing agreements with Filipino citizens, or corporations or associations at least 60% of whose capital is owned by such citizens,” it stated. 

The Philippine government had argued that the provision did not apply to the JMSU because it covers only pre-exploration activities and not actual exploration. 

The court shot down that argument, ruling that JMSU was “executed for the purpose of determining if petroleum exists” in the agreement area, which covers parts of the South China Sea.

CNOOC and PETROVIETNAM are wholly owned by Beijing and Hanoi, respectively. Corporate and embassy representatives did not immediately respond to RFA-affiliate BenarNews requests for comment.

The ruling stemmed from a petition filed in 2008 by two Philippine congressmen, Satur Ocampo and Teodoro Casiño, both members of Bayun Muna, a leftist party. They argued that the JMSU was illegal because it allowed foreign companies wholly owned by China and Vietnam to undertake large-scale exploration in violation of the constitution. 

The deal expired that same year and was not renewed. Still, the new ruling could have an impact on exploration issues in the disputed waters.

“A win for our country’s sovereignty. Bayan Muna filed this petition as far back as 2008 as China has been using [the] JMSU as cover in its unbridled exploration and incursion in our territory, particularly in the West Philippine Sea,” former Bayan Muna Rep. Carlos Isagani Zarate said on Twitter.

The West Philippine Sea refers to Manila’s territorial claims in the South China Sea. 

Arroyo, an ally of Beijing, had pushed for the agreement in a bid to build and maintain peace and stability in the South China Sea.

Her successor, Benigno Aquino III, filed a complaint against China before an international court, resulting in a ruling in 2016 that invalidated the sweeping claims of Beijing in the South China Sea. Beijing has since ignored the ruling.