The Philippines’ Supreme Court on Tuesday ruled an oil exploration deal in the South China Sea with China and Vietnam unconstitutional because it allowed foreign companies to explore for natural resources owned by the Filipino people but without adequate safeguards.
The ruling contradicted the Joint Seismic Marine Undertaking deal signed 18 years ago by the Philippine National Oil Co. (PNOC), China National Offshore Oil Corp. and Vietnam Oil and Gas Corp. (PETROVIETNAM) was signed.
“The court ruled that the JSMU is unconstitutional because it allows wholly-owned foreign companies to engage in exploration of the country’s natural resources without observing the protections provided in Section 2, Article XII of the 1987 Constitution,” das said court in a statement.
This section states that all lands of public ownership, as well as water, minerals, coal, petroleum and other mineral oils, any potential sources of energy, fisheries, forests or timber, wildlife, flora and fauna “and other natural resources are the property of the state “.
The court released its decision as judges in the northern mountain town of Baguio were in retreat and China was trying to revive an oil exploration deal with President Ferdinand Marcos Jr. His predecessor Rodrigo Duterte ended talks with Beijing as both nations continued to be embroiled 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 on oil and gas exploration in the South China Sea “at an early stage,” both sides said.
It was not immediately clear how the Supreme Court ruling would affect this agreement.
Among those accompanying Marcos on his visit to China was former President Gloria Macapagal-Arroyo, whose government signed the exploration agreement with China and Vietnam.
The agreement covered approximately 80% of Philippine territorial waters and was designed to conduct seismic prospecting in an area covering nearly 150,000 square kilometers. (57,900 square miles) west of the island of Palawan.
The ruling noted that a constitutional provision states that “the exploration, development and use of natural resources must be under the full control and supervision of the state.” Twelve judges approved the decision, while two dissented and one abstained.
“The state may engage in such activities directly, or enter into co-production, joint venture, or production-sharing agreements with Filipino citizens or companies or associations that have at least 60% equity ownership by such citizens,” it said.
The Philippine government had argued that the provision did not apply to JMSU as it only covered pre-exploration activities and not actual exploration.
The court rejected that argument, ruling that JMSU was executed in the treaty area, which includes parts of the South China Sea, “to determine if there was petroleum.”
CNOOC and PETROVIETNAM are 100% owned by Beijing and Hanoi respectively. Company and embassy officials did not immediately respond to requests for comment from RFA affiliate BenarNews.
The verdict stems from a petition filed in 2008 by two Filipino congressmen, Satur Ocampo and Teodoro Casiño, both members of the left-wing Bayun Muna party. They argued that JMSU was illegal because it allowed foreign companies wholly owned by China and Vietnam to conduct large-scale exploration in violation of the constitution.
The contract expired that same year and was not renewed. Still, the new ruling could have implications for exploration issues in the disputed waters.
“A win for the sovereignty of our country. Bayan Muna submitted this petition back in 2008 as China used it [the] JMSU as a cover for its rampant exploration and invasion of our territory, particularly in the western Philippine Sea,” former Bayan Muna MP Carlos Isagani Zarate said on Twitter.
The West Philippine Sea refers to Manila’s territorial claims in the South China Sea.
Arroyo, a Beijing ally, had been pushing for the deal to build and maintain peace and stability in the South China Sea.
Her successor, Benigno Aquino III, filed a lawsuit against China in an international court that resulted in a 2016 ruling that invalidated Beijing’s sweeping claims in the South China Sea. Beijing has since ignored the verdict.
BenarNews is a news service associated with RFA.