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SC nixes WPS oil pact with China, Vietnam

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Denies final appeal by gov’t agencies for exploration deal

The Supreme Court has affirmed with finality its January 10, 2023 decision on the unconstitutionality of a tripartite partnership with Chinese and Vietnamese state-owned firms to explore a portion of the West Philippine Sea for oil and gas.

In a resolution made public on Feb. 15, the High Court denied the motion for reconsideration filed by the Department of Foreign Affairs, Department of Energy, Philippine National Oil Company, and PNOC Exploration Corporation.

The 2005 Tripartite Agreement for Joint Marine Seismic Undertaking (JMSU), first approved during the Arroyo administration, was among theChina National Offshore Oil Corporation (CNOOC), Vietnam Oil and Gas Corporation (PETROVIETNAM), and Philippine National Oil Company (PNOC).

It was to cover 142,886 square kilometers in the WPS. According to thepetitioners, around 80 percent of the area covered by the agreement lay within the Philippines’ 200-nautical-mile Exclusive Economic Zone.

The petition against the JMSU was filed in 2008 by then-Bayan Muna Party-List Reps. Satur Ocampo and Teodoro Casino, Anakpawis Rep. Crispin Beltran, Gabriela Women’s Party Reps. Liza Maza and Luzviminda Ilagan, and Reps. Lorenzo Tañada III and Teofisto Guingona III.

The en banc resolution was written by Associate Justice Samuel Gaerlan, who also penned the 2023 decision.

“We reiterate that for JMSU to be valid, it must be executed and implemented under any of the modes under Section 2, Article XII of the Constitution,” the decision read.

The modes for oil exploration provided under the Constitutional provision are as follows: (1) directly by the State; (2) through co-production, joint venture or production-sharing agreements withFilipino citizens or qualified corporations; (3) through smalls-scale utilization of natural resources by Filipino citizens; and (4) 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.

“For obvious reasons, JMSU does not fall into the first three modes since it involves foreign-owned corporations,” the SC said.

As for the fourth mode, the High Court noted that the President may enter into agreements with foreign-owned corporations involving either technical or financial assistance for large scale exploration, development, and utilization of minerals, petroleum, and other mineral oils according to the general terms and conditions provided by law.

“Based on the foregoing, for an agreement/contract under the fourth mode to be valid, it must foremost be entered into by the President himself/herself. The text of the provision is clear. Here, the President is neither a party nor a signatory to the JMSU. The contracting party is PNOC represented by its President and Chief Executive Officer,” the High Court said.

Citing the separate and concurring opinion of Chief Justice Alexander Gesmundo, the High Court said neither the PNOC nor the DOE is authorized to enter into agreements pertaining to large-scale exploration of natural resources in the exclusive economic zone.

Only the President is given such authority, it added.

“For this reason alone, JMSU should be held unconstitutional.”

Despite last year’s earlier ruling of the Supreme Court, President Marcos said the Philippines will “find a way to move the process forward” for oil exploration projects in the West Philippine Sea.

“It’s imperative for the Philippines to find a way to move the process forward so as to be able to assure ourselves of a fuel supply during that transition period,” he said in an interview with NHK in December.

Mr. Marcos admitted negotiations with China for joint oil and gas exploration in the WPS, particularly in Recto Bank (Reed Bank), have remained stalled.

“We are still in a deadlock right now… We have been in negotiationsfor over three years now, and have made very little progress,” the President added.

Mr. Marcos said as far as the Philippines is concerned, Recto Bank “is not in a conflict area.”

“This is very clearly within our EEZ (exclusive economic zone). It iscertainly within our baselines, within the maritime territory of the Philippines. So, whatever it is that we will do in the future, it has to be consistent with that understanding,” he said.

In response, the Chinese Embassy in the Philippines affirmed that Beijing remains committed to pursuing the undertaking.

“Our position on joint development of oil and gas with the Philippines remains,” the embassy said.

Signed before China asserted its maximalist “nine-dash line” claim to nearly the entire South China Sea, which it formally submitted to a United Nations body in 2009, the 2005 tripartite agreement was a remnant of a calmer era, when the region’s unresolved maritime and territorial disputes were mostly dormant.

At the time, Manila’s relationship with Beijing was in a buoyant state under the administration of President Gloria Macapagal Arroyo, who in 2005 hailed a “golden age” in bilateral relations.

The agreement was nonetheless highly controversial in the country, and building domestic political pressure, along with the deterioration in relations between China and Vietnam, prevented the renewal and extension of the agreement, which expired in 2008.


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