The Supreme Court on Tuesday declared as unconstitutional the 2005 Tripartite Agreement for Joint Marine Seismic Undertaking (JMSU) among China National Offshore Oil Corp. (CNOOC), Vietnam Oil and Gas Corp. (PETROVIETNAM), and the Philippine National Oil Company (PNOC) covering 142,886 square kilometers in the South China Sea.

Voting 12-2 with one associate justice abstaining, the SC resolved to declare JMSU as 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 en banc decision penned by Associate Justice Samuel H. Gaerlan was not immediately available, but the SC Public Information Office released the summary of the ruling.

This came a day after the Department of Energy said it will proceed with oil and gas development in other areas of the country with an eye on foreign and domestic investors, as it awaits the resumption of talks with China for a possible joint exploration of the West Philippine Sea.

The agreement to restart talks with Beijing for a possible joint exploration was reached during the bilateral meeting of President Ferdinand Marcos Jr. with Chinese President Xi Jinping last week, according to Energy Secretary Raphael Lotilla.

Chief Justice Alexander G. Gesmundo and 10 other justices concurred in the decision. Associate Justices Amy C. Lazaro-Javier and Rodil V. Zalameda dissented, while Associate Justice Ramon Paul L. Hernando was on leave and did not take part.

The SC’s PIO said a copy of the decision would be made public as soon as it is available.

In 2008, the group of Neri Colmenares, Satur C. Ocampo, and Teodoro A. Casino, then Bayan Muna party-list representatives, questioned the three-way agreement before the High Court.

The petitioners argued that the JMSU violated Section 2, Article XII of the 1987 Constitution, which mandates that “the exploration, development, and utilization (EDU) of natural resources shall be under the full control and supervision of the State.”

According to them, the tripartite agreement was illegal as it allowed foreign corporations wholly owned by China and Vietnam to undertake largescale exploration of the country’s petroleum resources.

They noted it violated the Constitutional provision that reserves the EDU of natural resources to Filipino citizens, or corporations or associations with at 60 percent of Filipino-owned capital.

The government at that time countered that Section 2, Article XII of the Constitution was inapplicable as the said provision contemplates EDU of natural resources, whereas the JMSU only involves pre-exploration activities.

In resolving the issue, the SC stressed that the term “exploration” pertains to a search or discovery of something in both its ordinary or technical sense, but the JMSU “involves the exploration of the country’s natural resources, particularly petroleum.”

The high court also cited the text of the fifth “whereas” clause of the JMSU, which states 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.”

Thus, the SC said, “it is clear that the JMSU was executed for the purpose of determining if petroleum exists in the Agreement Area.”

“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,” it added.

It said the SC also held that the “JMSU involves the exploration of the country’s petroleum resources; it falls within the ambit of Section 2, Article XII of the 1987 Constitution.”

In a briefing Monday, Lotilla said: “The agreement was to resume negotiations or resume talks. So we do not have any agreement on moving forward yet with the actual carrying out of activities in the Recto Bank.”

“In the meantime, we are proceeding with oil and gas development in other areas of the country… We will be open to foreign and domestic investors carrying out development activities. As far as those are concerned, we will be able to go ahead,” he said.

The Philippine National Oil Company-Exploration Corp. (PNOC-EC) has already issued an invitation for potential farm-ins to several of its service contracts.

Lotilla said the DOE will wait for guidance from the Department of Foreign Affairs as to “the timing and the subject matter of the resumption of talks and even the venue of the talks.”

“Our Presidents have agreed in principle, and we do not expect them to negotiate the details at this particular point. What it establishes is a healthy environment for the talks to take place that there is, at the highest levels of both the Philippine and Chinese governments, a commitment to move forward the discussions,” the Energy chief added.

Lotilla said both parties “agreed to resume discussions at an early date, building upon the outcomes of previous talks.”
The Philippines terminated the talks for joint oil and gas exploration with China in June last year because of constitutional constraints and issues on the country’s sovereignty.