The decision of the Supreme Court to void the 2005 Tripartite Agreement for Joint Marine Seismic Undertaking (JMSU) among China National Offshore Oil Corporation (CNOOC), Vietnam Oil and Gas Corporation (PETROVIETNAM), and the Philippine National Oil Company (PNOC) is a welcome development.
The high tribunal ruled 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 for in Section 2, Article XII of the 1987 Constitution.” The particular section mandates that “the exploration, development, and utilization of natural resources shall be under the full control and supervision of the State.”
The decision comes at a time when the country, which relies heavily on imported fuel, is looking into exploring alternative sources of energy to cushion the impact of supply shocks. And among those being eyed as sources of alternative fuel are possible oil and gas deposits in the vast West Philippine Sea.
With the Supreme Court decision, the parameters set by the 1987 Constitution have become clearer. Any move to explore, develop, and utilize the country’s natural resources—whether at the West Philippine Sea or any area under the country’s jurisdiction—will now be guided by the Constitution and the High Court’s ruling on the JMSU.
The verdict stemmed from the petition filed in 2008 by then Bayan Muna Party-List Reps. Neri Colmenares, Satur C. Ocampo and Teodoro A. Casino, challenging the JSMU. They asserted that the tripartite agreement“was illegal as it allowed foreign corporations wholly-owned by China and Vietnam to undertake large scale exploration of the country’s petroleum resources, in violation of the constitutional provision which reserves the exploration, development, and utilization of natural resources to Filipino citizens, or corporations or associations at least 60 percent of whose capital is owned by such citizens.”
Responding to the petition, the government then argued that Section 2, Article XII of the Constitution is not applicable to the JMSU as the provision deals with “exploration, development, and utilization”of natural resources. It explained that the JMSU only covers pre-exploration activities.
But the Supreme Court was unconvinced by the government’s assertion. In resolving the issue, the High Tribunal ruled that the JMSU “involves the exploration of the country’s natural resources, particularly petroleum.”
The SC said, “it is clear that the JMSU was executed for the purpose of determining if petroleum exists in the Agreement Area.” It cited the “fifth whereas” clause of the JMSU, which states that the “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.”
“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,” the Supreme Court said in a decision written by Associate Justice Samuel H. Gaerlan.
With the verdict, wholly-owned foreign entities cannot explore, develop, and utilize the country’s natural resources. It is reserved for Filipinos or entities 60 percent-owned by the country’s citizens.