High court says 2005 PH, China, Vietnam joint oil exploration agreement unconstitutional

The Supreme Court on Tuesday, January 10 canceled a 2005 agreement among state-owned oil companies of the Philippines, China and Vietnam to explore a 142,886-square kilometer area of the South China Sea.

Voting 12-2-1, the high court en banc declared the 2005 Tripartite Agreement for Joint Marine Seismic Undertaking (JSMU) 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 three state-owned firms are the China National Offshore Oil Corporation (CNOOC), Vietnam Oil and Gas Corporation (PETROVIETNAM), and Philippine National Oil Company (PNOC).

Under Section 2, Article XII of the 1987 Constitution states that “the exploration, development, and utilization (EDU) of natural resources shall be under the full control and supervision of the State.” 

Back In 2008, lawmakers from Bayan Muna Party List Representatives Satur Ocampo and Teodoro Casiño challenged the JMSU before the High Court, seeing that the JMSU agreement violates the Constitution that mandates reserving “the EDU of natural resources to Filipino citizens, or corporations or associations at least sixty (60%) percent of whose capital is owned by such citizens.”

The agreement was signed by then President Gloria Macapagal-Arroyo in March 2005 in Manila. The three parties expressed through the tripartite agreement their desire to engage in joint petroleum research in a large area in the South China Sea as a “pre-exploration activity.” 

In response to the petition, the concerned parties maintained that Section 2, Article XII of the 1987 Constitution was inapplicable as the JMSU only involves “pre-exploration activities.”

However, the collegial body stressed that the parties calling the joint research a “pre-exploration activity” is of “no moment.”

The court said that “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,”

SC Associate Justice Samuel Gaerlan wrote the decision, which was concurred in by Chief Justice Alexander Gesmundo and 10 other Associate Justices.